Posted on 11/21/2005 8:39:22 PM PST by ChessExpert
The final budget numbers got very little attention. .... And it turns out that these numbers paint a fairly encouraging picture. ... Perhaps that’s why they didn’t get much coverage
(Excerpt) Read more at nationalreview.com ...
Again. As always. As JFK, RWR, and GWB knew they would. And the pathetic RINOS that want to raise taxes need to be slapped down.
One glance at the chart, and WOW!
It's not entirely sustainable, though. The repatriation of offshore profits is a one-time pop that bumped the corporate tax receipts and the lower cap gains rate incentivized taking the gains now rather than later.
Laffer curve BUMP!
"And it turns out that these numbers paint a fairly encouraging picture. Perhaps that’s why they didn’t get much coverage.
The deficit dropped by 23 percent in the latest fiscal year, down to $318.6 billion. This occurred because the economy is booming. Personal income tax receipts are up 14.6 percent, which obviously points to higher overall income growth."
Somehow, this simple message needs to be sent to the Ameican people through the "media wall."
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Two things.
One is that I propose that once and for all we drop this nonsense about having to "pay for a taxcut" by raising taxes. That kind of dribble is like saying we should use a spending cut to finance an increase in spending.
The other is that it's high time we dropped the 'ain't it awful' hand-wringing. 'Concern' only makes sense if it leads us to work it out like an adult; otherwise we're just wallowing in it like a child.
You can only say it's not sustainable if you show us how much of the increased receipts were from repatriation and how much were from cap gains.
And the supply-side roosters are claiming credit for the dawn. Again. See the analysis at http://home.att.net/~rdavis2/taxcuts.html. If you have specific disagreements with any of the numbers or conclusions, please post them. Alternately, please post a link to a budget document or credible economic study that purports to show that any major cut in income tax rates has ever paid for itself. I am more than willing to look at any serious evidence that any supply-sider is willing to present. But I have had a very hard time finding a supply-sider who will present any.
Except for a capital gains tax cut, I don't believe any tax cut "pays for itself". Do you dispute the fact that a cut in marginal income tax rates partially "pays for itself"?
In other words, if you cut the top tax rate from 70% to 50% you should reduce receipts by 28.5%. If you reduce the top rate from 50% to 28% you should reduce receipts by 44%. Does this actually occur?
I am more than willing to look at any serious evidence that any Concord Coalition member is willing to present.
What you're saying is that everyone is supposed to accept high taxes, and that any reduction has to be justified to the satisfaction of the tax advocate. I prefer the idea that any taxes at all have to be justified before I'm willing to vote for them. Let's decide who has the burden of proof.
| Who has to explain the need for taxes? | Taxpayer | Tax spender |
| expat_panama | x | |
| Remember | x |
So far it's a tie. Anyone else care to vote?
This seems to be a common argument. Over the past decade, I've averaged an annual return of about 10% on my investments. Would I rather have the government take my money, that I can earn 10% on, to feed an insatiable beast or; would I rather they borrow money at 4% to meet their needs? Does anyone really doubt the answer to this?
I don't know that tax cuts can ever starve the beast enough to pay for themselves. However, the benefits of allowing American's to keep more of their money are self evident in the rapidly increasing household net worth numbers.
Here's an interesting (but older) article from Heritage that talks more about tax cuts and their many benefits. You might find chart 6, 7 and 9 interesting. I wonder if the tax cuts of the 80's would have paid for themselves if congress could have controlled their spending.
My bet is that Remember will not accept the article as proof that that we can have a tax cut. I don't believe that there is anything that will ever be acceptable. We could cut the deficit --not enough. Eliminate the deficit --the debt is still there. Pay off the debt -- oops, now we have more spending to cover.
My point is that it's the taxes that are not justified and a justification for tax-cuts is never needed. Anyone who wants my money is going to have to ask me politely and be very convincing. I don't need to explain nothin'.
If nothing else, some of the revenue lost in a cut in marginal income tax rates will come back to the government via other taxes. That is, some of that extra money in taxpayer's pockets will be invested or spent and incur other taxes. Likewise, much of the money spent by government is invested or spent by the recipients and incur other taxes. But these and many of the obvious motivational effects are factored into the revenue estimates.
Hence, in that sense, tax cuts (and spending) partially pay for themselves. Likewise, I would have had no problem if ChessExpert had said:
Federal tax receipts shrank less in response to a tax cut than one might expect. Again.
Then, I would have had no disagreement. The trouble is, he said something quite different. In any case, I'm happy to see that you are taking a reasonable view on this matter and not the "tax cuts = free lunch" view.
My point is that it's the taxes that are not justified and a justification for tax-cuts is never needed. Anyone who wants my money is going to have to ask me politely and be very convincing. I don't need to explain nothin'.
I don't know why I answer your pings since, as often as not, you respond with exaggeration, if not outright insult. I have never stated that we should always have a balanced budget, much less that we should pay off the entire debt. Regarding tax cuts, I've simply said that I don't believe that the government should have implemented large, intended-to-be-permanent tax cuts in a time of war and when they are projecting that the public debt will reach 250% of GDP by 2075 (see the first table and graph at http://home.att.net/~rdavis2/pro2006.html). At the very least, they should reinstate PAY-GO and pay for any spending or tax cuts that they feel are necessary.
You, on the other hand, appear to have a truly extreme position. You state that "a justification for tax-cuts is never needed". Hence, if we each paid one dollar per year in taxes, a further tax cut would require no justification. How would we pay for our government, including our forces in Iraq? I assume that you would suggest that we just borrow it. How would we pay the interest on the exploding debt? Just borrow the interest payments, I assume.
Regarding whether or not I will accept the article as proof, please point out the proof in the article. Now, let's stay focused on the fact that I was asking for proof that "any major cut in income tax rates has ever paid for itself". The closest thing that I can see as "proof" is Chart 6. If this is the "proof", the analysis at http://home.att.net/~rdavis2/taxcuts.html deals with it.
Yowsuh! Either you got up real early or were up way too late with that one --no matter. Good to hear from you and a very Happy Thanksgiving to you and yours.
As usual, I'm all confused. Do you accept the Laffer model or not? When I wrote my post 13 I was under the impression that you considered the max revenue/equilibrium idea to be free lunch/bogus and that there was absolutely no input that you'd ever accept as proof that the model was in fact, useful. However, from your post 15 I seem to gather that you feel I was judging you unfairly. I'd very much like to know which is what-- please tell me what you think of it and the article that started this thread.
Sorry, it's possible that I misinterpreted your comments. My reply was in response to the following comment you made to Mase and me:
My bet is that Remember will not accept the article as proof that that we can have a tax cut. I don't believe that there is anything that will ever be acceptable. We could cut the deficit --not enough. Eliminate the deficit --the debt is still there. Pay off the debt -- oops, now we have more spending to cover.
That didn't sound to me like you are saying that we are having an honest disagreement. It sounded like you were saying that there was no reasonable fiscal policy that I would accept as responsible. We could be running a huge surplus and I would demand that it be bigger. And so on. So I responded by literally interpreting your comment that "a justification for tax-cuts is never needed" to mean you supported a tax rate of zero. Suffice to say that neither of us hold those extreme positions.
As usual, I'm all confused. Do you accept the Laffer model or not? When I wrote my post 13 I was under the impression that you considered the max revenue/equilibrium idea to be free lunch/bogus and that there was absolutely no input that you'd ever accept as proof that the model was in fact, useful. However, from your post 15 I seem to gather that you feel I was judging you unfairly. I'd very much like to know which is what-- please tell me what you think of it and the article that started this thread.
I believe that the Laffer model is correct at the endpoints. A tax rate of zero will bring in zero revenues as will a tax rate of 100 percent (ignoring a few already wealthy people who might still work). However, I don't believe that it is a nice normal curve reaching the maximum close to the midpoint. The "free lunch" that I referred to is the belief that cuts in the top marginal rate in the current 30 to 40 percent range will pay for themselves. Every one of Bush's budget documents that has addressed the matter has projected that the tax cuts will cause revenues to be lower, at least in the short to mid-term (the long-term is not projected). Nothing that I saw in Heritage document suggested, much less proved, Bush to be wrong on that estimate. In any case, I hope that you and yours had a Happy Thanksgiving as well!
Let me know if you'd be willing to accept the model if you could reserve the right to add your own scales (log/liniar, log log, trigonometric, whatever). I had understood that the model only required a maximum revenue point between 0 and 100%, increasing revenue between 0 and the max, and decreasing revenue between the max and 100. Perhaps you'd be willing to accept a curve described in those terms.
If you do, please tell me where on the curve you'd want to plot current revenue. If you don't, I'd be grateful if you could tell me where and why the plot would show reversing/negative slopes.
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