Washington Post: Mitt Romney Tax Plan 'Garbage'
- Thread starter Free Thinker
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Well that does put you on par with 5year old's who still believe in the toothfairy.
Could you please explain why that happened? I don't understand it.
[ italics mine.]
"Both the Kennedy and Mellon tax-cut packages actually lowered overall revenue, relative to a baseline where the tax cuts did not happen. They just increased some receipts from richer families. Take a Congressional Budget Office analysis of the Kennedy-era cuts. No studies "showed that the increased economic activity generated by the tax cut raised revenues and lowered countercyclical transfer payments enough to make the tax-rate reductions self-financing," it wrote in 1978. "Instead, the models showed a net increase in the federal deficit, after three years, of $5 billion to $13 billion," versus models where the tax cuts never took effect. Shorthand: The tax cuts did pay for themselves a little bit by inducing growth, but not nearly enough to pay for themselves entirely.
Moreover, economists stress that tax cuts (and increases, for that matter) hardly work in a vacuum to bring about changes in receipts. Income-tax payments tend to naturally increase year-on-year because of population growth, GDP growth, and inflation. Monetary policy, government spending, and the business cycle also have a major impact. Thus, showing causation becomes a tricky exercise when it comes to taxes. Receipts often climb after tax cuts, but not necessarily because of them."
http://www.slate.com/articles/busin...x_cuts_ever_increase_government_revenues.html
Note: All tax cuts are not the same. There is some rational justification for the Mellon and Kennedy cuts, in spite of the cuts not raising overall revenue. (They were instituted from very high top marginal rates in periods of more restrained Federal spending.) The Reagan and Bush cuts, however, coming at a time of huge increases in federal spending, were disastrous for their long range effect on the economy. In each of the latter two cases the economy was stimulated by large increases in government spending and borrowing following the cuts, however the long term result was massive debt.
"Both the Kennedy and Mellon tax-cut packages actually lowered overall revenue, relative to a baseline where the tax cuts did not happen. They just increased some receipts from richer families. Take a Congressional Budget Office analysis of the Kennedy-era cuts. No studies "showed that the increased economic activity generated by the tax cut raised revenues and lowered countercyclical transfer payments enough to make the tax-rate reductions self-financing," it wrote in 1978. "Instead, the models showed a net increase in the federal deficit, after three years, of $5 billion to $13 billion," versus models where the tax cuts never took effect. Shorthand: The tax cuts did pay for themselves a little bit by inducing growth, but not nearly enough to pay for themselves entirely.
Moreover, economists stress that tax cuts (and increases, for that matter) hardly work in a vacuum to bring about changes in receipts. Income-tax payments tend to naturally increase year-on-year because of population growth, GDP growth, and inflation. Monetary policy, government spending, and the business cycle also have a major impact. Thus, showing causation becomes a tricky exercise when it comes to taxes. Receipts often climb after tax cuts, but not necessarily because of them."
http://www.slate.com/articles/busin...x_cuts_ever_increase_government_revenues.html
Note: All tax cuts are not the same. There is some rational justification for the Mellon and Kennedy cuts, in spite of the cuts not raising overall revenue. (They were instituted from very high top marginal rates in periods of more restrained Federal spending.) The Reagan and Bush cuts, however, coming at a time of huge increases in federal spending, were disastrous for their long range effect on the economy. In each of the latter two cases the economy was stimulated by large increases in government spending and borrowing following the cuts, however the long term result was massive debt.
1. apparently you don't understand what you posted.
You are reading a slanted pieced from a leftist. In which, some left econ phony crafted a bullshit model (excel spreadsheet most likely) which concluded that had taxes not been cut we would have had even more revenue. (that is what the "baseline" for the article is... a fantasy model not real revenue)
But... and this is important, in reality... (not the model) ... revenues went on to new highs after the tax cuts...
2. Also note, Keynes stated a way out of a recession is to cut taxes...
You are reading a slanted pieced from a leftist. In which, some left econ phony crafted a bullshit model (excel spreadsheet most likely) which concluded that had taxes not been cut we would have had even more revenue. (that is what the "baseline" for the article is... a fantasy model not real revenue)
But... and this is important, in reality... (not the model) ... revenues went on to new highs after the tax cuts...
2. Also note, Keynes stated a way out of a recession is to cut taxes...
its funny you would show up here..
you were the one who first posted that slate article...
and you also did not understand that the "baseline" was a model.
Note... piezoe understands econ even if he got this cutting taxes issue wrong... you just lie your ass off and don't understand econ at all.
I think it is a lot less cut and dry than you are making it sound. Define what aspects of the tax cuts worked in the past, then we can go with what worked. If you are simply saying that tax cuts resulted in increased revenue, then there is definitely room to debate that.
For every tax cut that resulted in higher tax revenues, there is an instance of a tax increase that also led to higher revenues.
My point is that in order to claim that a tax cut will result in higher revenues, you must also take the opinion that a tax increase will result in lower revenues. That has never in history proven to be true. The periods of 5 & 10 years immediately following tax increases have increased revenues by as much or more than the periods immediately following tax cuts.
What we can say is that for the periods that we have on record, typically when there are dramatic tax cuts, GDP growth is higher than tax receipt growth. Visa versa for tax increases.
So if you want to make the argument that the national debt isn't top priority right now, and the main thing should be increasing GDP, then tax cuts are preferred. If you think that the national debt and expenses are top priority, then a tax increase would be preferred. The problem with the GOP is that they are screaming for a tax cut, and declaring that the national debt is too high. Those are conflicting stances in today's tax environment.