Cutting taxes increases revenues is what they say. ~ Well have revenues

[Bandit]

increased? We have had not one but two substantial tax cuts so if what they say has any truth at all to it Revenues should be substantially more than they were in 2000 before tax cuts were put into place. This should be an easy one. This has nothing to do with spending and deficits it has to do with credibility. Do tax cuts increase revenues? Has the US Government taken in more than it did before the cuts?

[David__77]

1. Their stupid, false argument.

They have put forth this crude caricature in order to brainwash some "conservatives" to actually believe that cutting taxes ALWAYS increases revenues, because it so "grows" the economy. Of course this is so untrue. It's a rare case when the stimulative power of a cut will cause increased revenues to totally offset the decrease from the cut. The actual rightist thinkers know this too. That's why they raise taxes when they feel they must.

[judge_smales]

2. I can't belive this is back.

The Laffer Curve was *thouroughly* disproven during the Regan years. And yet we try again. Sheese!!

What is that called when you repeat the same actions but expect different results?

[Cary]

4. Judge, you beat me to it!

[Cary]

3. What's wrong with you, Bandit (read in great sarcasm).

Don't you know your Laffer curve? It was created by Arthur Laffer, the genious who lost 50 pounds by soaking himself, day after day, in a bathtub full of ice.

He came up with his now famous Laffer curve while eating a Big Mac. He looked at his napkin and pronounced it "the Laffer curve". Great genious there, using the napkin front of him rather than drawing a Bell Curve from scratch.

The theory is that there is a maximum revenue point for taxation. After that point, when the rate of tax reaches the zenith, tax revenues decline.

To further demonstrate Laffer's genious, he was kicked out of the University of Chicago for lying on his resume. He created a PHd in Economics from the same McDonald's napkin. Sheer genious, I tell you.

So don't dispute the Laffer curve. Conservatives don't like it when you do that.

[Bandit]

6. I was hoping for some figures or something

I know it is BS and you know it is BS but the Dittoheads all believe it is gospel. I wanted numbers indicating exactly how much BS it truely is. What was the Government Tax revenue in 2000 and what is it in 2003. I realize 2003 hasn't all been accounted for so let's say 2002. Within a two year period revenues should have grown substantially if they are correct in their assumption that cuts mean more money.

[RichardRay]

5. Supply side hokum

Event the most ardent supply side economists have admitted that while cutting taxes may stimulate some parts of the economy, the increase is not adquate to off set the loss of revenue from the original cuts. I'd have to find the research again, but I recall the best case being about .71 cents in from stimulation for each 1.00 lost to the tax cuts. Most cases were not that good.

I think it's sort of like the WMD thing. The CIA analysts sent up an intelligence briefing with all kinds of caveats. The administration stripped out the caveats and used the (mis)information to blow smoke. The same thing happens with supply siders - the honest researchers say something like "while tax cuts stimulate some portions of the economy, the overall effect is a revenue loss." The politicians quote that as "Tax cuts stimulate the economy."

For a useful review of supply side "theory" and where it came from see:

The Rise of Supply Side Economics


(edit: added link)

[evil_orange_cat]

9. yup supply side is crap

gg

[Taeger]

10. REAL stimulus

REAL stimulus would be cutting payroll taxes. The results would be a subtle affect instead of a bubble (that rapidly bursts).

Tax the rich mercilessly, they rarely EARN the money they have. It is incentive to pay their employees more. If they can't keep it, they might as well pay their employees.

[RobertSeattle]

7. CONservatives never say where the floor is

If lower taxes increases revenues, and zero taxes would obviously cause zero revenues, ask a CONservative where the optimal rate is then. They'll never tell you. (By their logic, a tax rate of.0000000001% should cause infinite tax revenue)

Also, ask anyone who makes a million dollars a year how many people they hired because they got a 40K tax cut last year - I suspect the answer is a big fat ZERO. When wealthy people get more money, they don't just go hire someone "just because", they squirrel it away in investments - often investments that don't cause additional employment (such as Treasury bonds, existing house, etc).

Supply Side economists has never been proven to work very efficiently. Giving money to to the poor and the middle class is a much more effetive way to stimulate the economy.

[YNGW]

11. Just Wondering

>Giving money to to the poor and the middle class is a much more effetive way to stimulate the economy.

How do you propose "giving" money to the poor and middle class?

[Taeger]

13. The "afford worker" fallacy

This is the stupidest notion I've ever heard. If wages go up, the affluent "can't afford" to hire someone. Or if you tax the wealthy they "can't afford" to hire someone.

The bottom line is that people are employed for the sake of MAKING MONEY!!!! It is an expression of profit. If that employee generates revenue, you will keep them. PERIOD!!!!!!

So cutting taxes on the rich provides ZERO incentive to hire. Why??? Because there is no profit function there. Your just GIVING money away.

And don't get me started on "investment". Buying stocks IS NOT INVESTMENT. It's gambling. Buying BONDS, that's investment.

[Taeger]

8. If i was a CEO

If I was a CEO, would I cut PRICES in order to RAISE revenues ...

NO.

Yes, if the economy goes WAY up, you might see increased revenues with lower taxation rates. However, that argument is pretty stupid because inflation gaurantees that revenue's will rise ANYWAY.

It's the old "trickle down" theory that doesn't work. "Bubble UP" economics is what works. Those were the economics of the 50s when labor unions were VERY STRONG and taxation on the rich was downright oppressive.

Like I always say, if your going to oppress someone, opress the wealthy.

[Gulf Coast J]

12. Sometimes you do cut prices to raise revenues

It just depends on elasticities.

Same with taxes. There are cases where lower taxes might result in higher revenues than if the cuts had never taken place. The JFK cuts (90 to 70 on top marginal rates) the first Reagan cuts (less likely, but 70 to 50 was probably needed). The capital gains tax cut during the Clinton years probably raised revenue as well. But there is nothing to suggest that any of the Bush tax cuts will raise revenues.

Keep in mind that the US economy of the 50s didn't have much international competition. Europe and Asia were still being rebuilt from the war. It's hard to imagine we could recreate economic conditions from the 50s and be successful today.

[Taeger]

15. Capital Gains Stupidity

The capital gains tax cut during the Clinton years probably raised revenue as well.

Really, how is that ????? Capital gains taxes are on PROFIT from investments.

So your suggesting that if people are taxed a little more on their investment, THEY'LL REFUSE THE PROFIT.

Are you a fucking mad hatter or just overexposed to propoganda.

If you wan't the BEST explanation of this supply side drivel, watch the roof scene from "The Shawshank Redemtion". The guard was bitching up a storm because he Inherited a LOT of money (in those times). But the government is going to tax him on it.

So in his fucked up world, it's BAD to receive money because he'll be taxed. Somehow he'll be WORSE off than if he didn't get the money at all. BTW, great performance by Clancy Brown. He is AWESOME in "Carnivale".

It absolutely amazes me that people who CLAIM to be champions of the free market understand NOTHING about it. The understanding is ZERO or NOTHING about it.

It's all a lie cooked up by clever people at think-tanks.

TAX THE RICH!!!!!

[YNGW]

16. Reply

>It absolutely amazes me that people who CLAIM to be champions of the free market understand NOTHING about it. The understanding is ZERO or NOTHING about it.
It's all a lie cooked up by clever people at think-tanks.
TAX THE RICH!!!!!

The problem is the rich have tax shelters and other ways of hiding money. I'm in the top tax bracket, and I assure you that if my taxes are raised, I'll find some way to shelter my income. Of course, I'm self-employed, so it's easier for me to shelter than a W-2 employee.

On top of that, there aren't enough rich people to tax in order to raise revenues that much even if you could get them to pay. Kerry will end up raising taxes on the middle class if he wants to generate revenues, just like Clinton did.

[Bandit]

18. just like Clinton did. ~~I beg to differ

Most taxpayers did not see their federal taxes increase. The 1993 tax increase, however, applied overwhelmingly to high-income taxpayers. The vast majority of American taxpayers saw no increase at all in their income taxes and were touched only by a 4.3 cent increase in the gas tax, which costs a typical household $38 per year.

http://www.youdebate.com/DEBATES/clintons_tax_increase.HTM

[YNGW]

23. Beg all you want.

As a middle income payer during the 90's, my taxes on the same income I had been receiving went up significantly in 1993. I expect the same to happen under Kerry.

[Gulf Coast J]

17. Capital gains

For some reason, I'm choosing to respond to your post in a civilized way:

You say that people won't refuse profits because they are taxed. But there are many things people can do with their money besides put it in the stock market. For example, if the average return to the market is 10% and I know I'll be taxed 50% on all profit, then an investment that only payed a 6% return suddenly is more appealing.

With high capital gains taxes, I'll also be more likely to hold on to the stocks that I own instead of transferring my assets into better stocks. Say I have 100 shares of GE and I expect them to grow 5% a year. I think that Wal Mart is going to grow by 6% a year. Depending on the capital gains tax, it might not be worth it for me to sell GE and buy Wal Mart. So a rate that is too high could cost the government revenue.

[Taeger]

24. So your saying

So your saying that if Capital Gains taxes are high, investors will switch from risky investments to safe investments like bonds.

Well buying stock IS NOT an investment in the economy. It's a personal investment. Only IPOs and new stock allotments represent REAL investments. Everything else is just churn. It adds NOTHING to the economy. It's Monte Carlo on steroids.

On the other hand, Bonds ALWAYS represent an investment. And jeez, munies are even tax free.

So your doomesday scenario is to cut off speculation at the knees and divert capital into munies and bonds???? Oh fucking no. That will be the end of the world for stock brokers (whose sole job is to sell transactions).

You live in a world of lies. You believe them because they support your own ego.

[Taeger]

25. Or the alternative...

They could put the money in savings account. Then banks would invest it FOR them. Very often, they would lend the money to people so they can build houses or open small businesses.

That would be even an EVEN WORSE fucking disaster.

[ProfessorGAC]

19. Far Too Two Dimensional In Your Thinking

The rise in revenues in the JFK cuts were based upon the elimination of DOZENS of tax deferrals at the same time. So, the impact on the highest income earners was less profound than a 90% to 70% cut would indicate.

Also, there was a huge jump in productivity per worker due to the first advances in industrial automation. Since wages were being pushed up by big union successes (UAW, Steel Workers and The Teamsters), there was a lot of cash to chase after those more plentiful goods. Thus, growth without significant price inflation.

At the same time, the first wave of Japanese goods, all very cheap, hit the shores in the early 60's. The impact of this was that American companies targeted more value-added and higher value goods wich meant the reduction of net export value was offest by more durable goods being made and sold.

In the 80's, the revenues did not really rise. Any dimensional analysis will show that the revenues increased to within 2% of where they would have gone without the tax cuts, due to the lowering of interest rates in 1982 and population growth. Given the first big advances in electronic monetary exchange, the velocity of money changed radically in the early 80's, resulting the the same dollar buying more goods. Hence, reduced inflation (which was very high just prior) and more taxable income overall. (More than 2 people being paid with the same set of dollars drives up GDP, and the 19.6% of GDP as gov't revenues drives up those revenues, too!)

In reality, the real GDP growth was very poor in the 80's and the tax cuts didn't stimulate anything. The GDP was artifically propped up by massive increases in deficit spending, so the growth was artificial with no change in productivity to support it. Volcker lowered interest rates more to make the gov't borrowing more affordable than he did to stimulate growth. And, it's a good thing that was his reason, because it didn't improve real growth at all.

You're taking two points in fact and making a simple X/Y correlation. But, macroeconomics doesn't work that way. There are far more variables and outcomes that need to be examined.

Lowering taxes and impinging on revenues, while increasing spending is a dreadfully poor way to manage an economy.

Last point: Stores often lower prices, not just to increase volume, in hopes of enhancing revenues, but also to shed inventory. They can carry only so much inventory on their books before the liabilities of those goods not being sold begin to impact equity values negatively. As a result, the prices go down, not to increase revenue, but to lower inventory value, increase short term cash flow, and make those funds available for new salable merchandise. This is a perfectly acceptable financial tactic, but you also seem to be confusing economics with finance. They're not the same thing.
The Professor

[Bandit]

14. There are times when it is good to cut prices to stimulate sales.

Usually when you do that it is with targeted goods and the rest of your goods stay at the same rate. It sometimes gets people in the store where as they might not have if prices hadn't of been cut. Of course no business could stay in business without a proper "profit margin". There is a time and a place and it is limited. No business would just across the board slash prices unless it was a going out of business sale. Is that what is going on in America? A going out of business sale.

[LostInTheMaise]

20. Nope. Tax the rich and feed the poor

It's the only final soultion to equality. If you are rich then you help the non-rich. It's the only way.

[Cary]

21. Actually, Lost, I think we need to get unions back in business.

The factory jobs that created the consumer society weren't so great, originally. It was the unions that made the $20 per hour line job, when that was a lot of money, and transformed the workplace.

Unions scoffed at unionizing the service sector. By the end of the decade 90% of all jobs will be service sector jobs. I violently agree about taxing those who can afford to be taxed. The government has to reinvest the money in education and infrastructure. We also need some kind of national healthcare.

But real opportunities aren't going to be there without collective bargaining. It is more of a political issue than a market issue.

[Bandit]

22. It is what Christ would do but then again Christ was not a Republican.

:shrug: