Skip to comments.Lower Rate, Higher Revenue
Posted on 02/04/2006 9:55:37 AM PST by Coleus
Capital gains tax revenues have increased in the three years since President Bush cut the capital gains tax rate, proving free-market economists right, and bureaucrats wrong. As Nobel laureate Milton Friedman often says, when you tax something you get less of it, and when you tax something less you get more of it. The "it" in this case is capital gains, which are the amount of money you make when you sell something for more than you paid for it.
Capital gains have jumped because the rate reduction boosted the after-tax return on capital, reviving the stock market as well as unlocking longer-term gains that can now be realized with a smaller tax bite.
The numbers tell an impressive story: In 2003, prior to the capital gains cut, the Congressional Budget Office was projecting capital gains tax revenues of $51 billion, $56 billion, and $62 billion respectively for the years 2003-2005, on capital gains realizations of $294 billion, $322 billion, and $350 billion. After the rate cut, the CBO predicted that realizations would be basically unaffected, and that therefore revenues would decline because of the lower rate.
The actual numbers for those years were re leased by the CBO last week, and the opposite happened - revenues were significantly higher than predicted before the capital gains tax rate cut - in other words, it more than paid for itself. In 2003, the year the rate was cut, realizations jumped from a projected $294 billion to an actual $323 billion. In 2004 and 2005, realizations skyrocketed to $479 billion and $539 billion, versus pre-rate cut projections of only $322 billion and $350 billion.
The dramatic rise in capital gains realizations fueled a corresponding increase in capital gains tax revenues - confounding the CBO model predictions. Cap gains revenues totaled $50 billion,
(Excerpt) Read more at nysun.com ...
Make the tax cuts permanent!
SLASH AND SLICE ALL TAXES
Replace the word taxes with politician of choice.
Given that there seem to be a lot of businesses shifting operations overseas, that would tend to suggest that the "rent" is far above the optimum level.
If anyone would like to be added to this ping list let me know.
John Linder in the House(HR25) & Saxby Chambliss Senate(S25) offer a comprehensive bill to kill all income and SS/Medicare payroll taxes outright and replace them with with a national retail sales tax administered by the states.
A bill to promote freedom, fairness, and economic opportunity by repealing the income tax and other taxes, abolishing the Internal Revenue Service, and enacting a national retail sales tax to be administered primarily by the States.
Refer for additional information:
refer Tax Freedom Day 2005 report PDF: Special Report No.134, April 2005
Total Effective Tax Rates by Level of Government
|Notes: Leap day is omitted to make dates comparable over time. Since depreciation is not available to pay taxes, GDP is an overstatement of spendable income for the purpose of measuring tax burdens. Depreciation is netted out of NNP.
"Overall, NNP provides the best statistical representation of the common notion of spendable resources. In 2004 NNP was $10,371.6 billion. Like GDP and PI, NNP is a component of the National Income Product Accounts (NIPA). These accounts are computed and compiled annually by the Commerce Depart-ments Bureau of Economic Analysis (BEA)."
0 First year introduction of HR2525(Fair Tax legislation).
1 Economic Growth and Tax Reform Reconciliation Act of 2001
Sources: Office of Management and Budget; Internal Revenue Service; Congressional Research Service; National Bureau of Economic Research; Treasury Department; and Tax Foundation calculations.
1. The CBO models are gospel and are often quoted by politicians to paint scary pictures of soaring deficits. The fact is that the models are static and severly flawed with regard to economic consequences of tax policy.
2. All evidence of tax cuts creating higher revenue is ignored. You only occasionally see articles such as this outside the WSJ or one or two other reasonable publications. MSM has easy access to this data but would rather shine the camera on some bloviating pol who rants and raves that the country can't afford tax cuts.
Going back to ancient times, the tax collector is often the downfall of the government.
And yet these morons (along with the Squirrels, of course) rely on CBO nonsense to try to stave off the FairTax ... which is coming anyway.
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