Posted on 02/01/2008 7:52:48 AM PST by Son House
Sources of Growth in Tax Revenues
....The bulk of the revenue increase was associated with corporate income taxes: Revenues from corporate income taxes rose from 1.2 percent of GDP in 2003 (their lowest level since 1983) to 2.7 percent in 2006 (their highest level since 1978).
....Revenues from individual income taxes increased 0.6 percentage points, from 7.3 percent of GDP in 2003 to 8.0 percent in 2006.
Corporate Income Tax Revenues.
Roughly two-thirds of the increase of 1.5 percentage points in corporate income taxes relative to GDP can be attributed to increases in corporate profits, according to current measures in the national income and product accounts (NIPAs). ....The remaining 0.2 percentage-point increase in corporate tax revenues relative to GDP is explained by other factors that influenced the effective tax rate on profits, such as capital gains realizations by corporations.
Tax Revenues in 2007
Revenues in the first seven months of fiscal year 2007 have continued to grow faster than GDP. Overall, revenues have grown by about 11 percent compared with what they were during the first seven months of 2006, although CBO estimates that the growth is closer to 9 percent when adjusted to remove the effects of more accelerated crediting of amounts paid with personal tax returns this year.
(Excerpt) Read more at cbo.gov ...
I like how this fella explains it,
http://taxingtennessee.blogspot.com/2007/04/federal-tax-revenue-growth-sets-record.html
Federal Tax Revenue Growth sets record
..... We keep hearing about the “tax cuts of 2003” (rates were decreased) when it was actually a “tax increase,” if we look at what happened to revenues. In 2006, tax revenues were at all-time historical high of $2.4 trillion. At the current pace, tax revenues collected this will be $2.64 trillion, and will set another record.
Won’t ever see this on MSM
Another good one with charts at the link;
http://www.willisms.com/archives/2005/04/federal_tax_rev.html
First, the good news (if you want lower deficits, at least):
Thus far in Fiscal Year 2005 (federal fiscal years actually start in October of the previous year), tax receipts are up 10% compared to this point in Fiscal Year 2004. Clearly, the economy has rebounded, and, even with the President’s tax relief packages, revenues flowing into the Treasury are up.
But there’s also not-so-good news.
Expenditures, already starting higher than revenues, are also up year-over-year. Thus far, expenditures in FY-2005 have grown by 7%, which is, however, slower than revenue growth.
From where have the bulk of the expenditure increases come?
Entitlements, mostly, plus national security (all numbers expressed in millions):
Democrats will raise taxes because the more money you have in your pocket, the less control they have over you. The more you are dependant on them, the happier they are. Remember it’s not the money they are after, it’s the control. Same thing with the Clintons....it’s not the money.....it’s the power they want.....power over you.
Haven’t heard much in the debates either, I think CNN is holding back till after the election of a Democrat, then CNN can tell Americans how stupid they are.
I would have thought that to not even be open for argument any longer as it has worked that way EVERY time since at least the 1960's.
Bares repeating;
http://www.willisms.com/archives/2005/04/federal_tax_rev.html
From where have the bulk of the expenditure increases come?
Entitlements, mostly
Someone hinting at the truth at the New York Times?
http://www.nytimes.com/2007/03/25/business/yourmoney/25view.html
While the blistering growth rate of Federal tax revenues has slowed, revenues are still rising at an unexpectedly high rate, narrowing the deficit and providing vindication for backers of President Bush’s 2001 and 2003 tax cuts. In the fourth quarter of 2006, according to the Treasury Department, federal receipts rose 8.17 percent from the quarter a year earlier. For the first five months of the current fiscal year, which started in October, federal tax receipts were up 9.3 percent.
Yep, who would of thought the CNN Democrat Debate for Hollywood, overwhelmed with calls of tax increases for the Rich.
And this fiscal genius(/s) endorses McDole;
http://globaleconomicanalysis.blogspot.com/2007/10/drop-in-revenue-growth-at-state-and.html
In California Schwarzenegger’s Fiscal Discipline Shattered by Subprime Slump
Four years after Arnold Schwarzenegger was elected governor of California, vowing to “tear up the state’s credit card,” the actor and former body-builder is about to charge $7 billion to taxpayers’ accounts.
My Comment: Using the words “Fiscal Discipline” and “Arnold Schwarzenegger” in the same sentence together is a joke unless there is a “negative” in the sentence somewhere.
California is selling notes tomorrow due in eight months to help pay its bills until tax revenue comes in, the largest short-term loan since Schwarzenegger took office and almost five times more than last year.
Indeed!
it really is a SAD situation isn't it?
Another veiw;
http://nationalreview.com/nrof_comment/riedl200504150847.asp
Washington will spend $22,039 per household in 2005 — the highest inflation-adjusted total since World War II, and $4,000 more than in 2001. The federal government will collect $18,248 per household in taxes. The remaining $3,791 represents the budget deficit per household, which, along with all prior government debt, will be dumped in the laps of our children.
Here’s the breakdown of how Washington will spend that $22,039 per household:
Social Security/Medicare: $7,245. The 15.3 percent payroll tax, split evenly between the employer and employee, covers most of these costs. This system can remain sustainable only if there are enough workers to support all retirees, which is why it risks collapsing under the weight of 77 million retiring baby boomers. If nothing is done, taxes will need to be raised by the current equivalent of $5,200 per household by 2030 and $13,500 per household in 2050 to pay all promised benefits. The unpredictable costs of the new Medicare drug entitlement could add thousands more to each household’s tax bill.
Defense: $4,451. The defense budget covers everything from military salaries to operations in Iraq and Afghanistan to the research, development, and acquisition of new technologies. Lawmakers drastically reduced defense spending following the collapse of communism in the early 1990s. The 9/11 attacks reversed this trend, and the $1,500 per household increase since 2001 has returned defense spending to its historical levels.
Low-income programs: $3,559. Nearly half of this spending subsidizes state Medicaid programs that provide health services to poor families. In line with economy-wide health-care trends, Medicaid costs are rising 9 percent per year. Other low-income spending includes: Temporary Assistance for Needy Families (TANF), food stamps, housing subsidies, child-care subsidies, Supplemental Security Income (SSI), and low-income tax credits.
Interest on the federal debt: $1,582. The federal government is $8 trillion in debt. It owes $4.7 trillion to public bond owners, and the rest to other federal agencies (mostly to repay the Social Security trust fund, which lawmakers raid annually). Record-low interest rates have reduced the interest payments by $1,000 per household since 1998. As interest rates rise back to normal levels, so will these costs to taxpayers.
Federal employee retirement benefits: $838. This spending funds the retirement and disability benefits of federal employees, including the military. Interest from federal trust funds covers part of this spending.
Education: $627. Primarily a state and local function, 9 percent of education spending comes from Washington. Federal education spending has surged 100 percent since the 2001 enactment of the No Child Left Behind Act. Most federal dollars are spent on low-income school districts, special education, and college student financial aid.
Health research/regulation: $614. Health research spending has doubled since 1999, and nearly all of that growth has been concentrated in the National Institute of Health. This category includes the Food and Drug Administration and dozens of grant programs for health providers.
Veterans’ benefits: $606. The federal government provides income and health benefits to war veterans. Spending is up 51 percent since 2001.
Highways/mass transit: $388. Most highway and mass-transit spending is financed by the 18.4 cent per-gallon federal gas tax. Washington subtracts an administrative cost and sends this money back to the states with numerous strings attached. Some economists suggest it would be more efficient to let states collect this tax and decide how to spend the money themselves.
Justice administration: $361. Justice spending includes federal attorneys and prisons, as well as law enforcement grant programs. New homeland security costs have added $80 per household to justice spending.
Unemployment benefits: $338. Unemployment costs fluctuate based on the number of unemployed Americans. Recent costs have ranged between $220 per household in 2000 and $526 per household in 2003. This year, unemployment costs are decreasing as job growth continues.
International affairs: $284. This includes foreign economic and military assistance, operation of American embassies abroad, and contributions to organizations such as the United Nations. International spending has doubled since 9/11.
Natural resources/environment: $275. This includes national parks, federal lands, water projects, and environmental clean-up.
Agriculture: $271. Despite rhetoric about supporting small family farms, the vast majority of farm subsidies are distributed to large farms with average household incomes over $135,000.
Yes, his endorsement of McDole has been so glorified, I’m horrified! McDole was against Bush lowering tax rates, but it just like immigration, build the fence; i.e. lower the tax rates => do not make Americans suffer Congresses fiscal retardation or the continual line of criminals trying to take our land!
Proving once again, their real goal is the destruction of our Constitution and bringing in marxism.
My Apology to Senator McCain, if you ever get the nomination, please use this data, you can win if the Clinton hate factor shows up to vote, but Obama will talk slogans around you not giving you a chance because Blitzer, Matthews, Russert, and Oberman will hav eto get to the next Question.
Roughly two-thirds of the increase of 1.5 percentage points in corporate income taxes relative to GDP can be attributed to increases in corporate profits
.
And who will have money to invest when Democrats eliminate the Bush’s lower tax rates? Matthews? Corporate profits will not come from my dollar cost averaging on 30K a year income.
The bulk of the revenue increase was associated with corporate income taxes
Should read;
The bulk of the revenue increase was associated with corporate profits
it only works until you have found the prime point on the laffer curve for each tax type, class, and bracket. Too high, revenue comes down because of stagnation and capital flight-—too low is self explanatory
Another New York Times?
http://www.nytimes.com/2005/07/13/business/13deficit.html?pagewanted=print
The big surprise has been in tax revenue, which is running nearly 15 percent higher than in 2004. Corporate tax revenue has soared about 40 percent, after languishing for four years, and individual tax revenue is up as well.
Most of the increase in individual tax receipts appears to have come from higher stock market gains and the business income of relatively wealthy taxpayers. The biggest jump was not from taxes withheld from salaries but from quarterly payments on investment gains and business earnings, which were up 20 percent this year.
More good stuff at this link;
http://www.heritage.org/Research/Taxes/bg1957.cfm
A rising tax burden has important implications for the debate over America’s fiscal and economic future. For instance, these numbers refute claims that Congress permanently reduced the tax burden by lowering tax rates in recent years. In fact, Congress moderated the rise in that burden only slightly. Moreover, the swelling tax receipts demonstrate that rate reductions stimulate growth and generate offsetting revenues, which is sometimes known as a supply-side or Laffer Curve effect.[4]
*sigh*
Talk about playing with words. He tries to make it sound that we got taxed more.
The federal income tax rate was reduced and tax revenue increased. It's that simple. No need to twist it all about.
That is true unfortunately and it is SAD that so few recognize that fact!
Here is more clear evidence from one of our {{{{GAG}}}} former presidents
"We just have to slow down our economy and cut back our greenhouse gas emissions 'cause we have to save the planet for our grandchildren."
William Jefferson Clinton, 1/30/2008 Denver, Colorado, stumping for his wife.
"We Just Have to Slow Down Our Economy" to Fight Global Warming
>>>Both Democrat Candidates will raise tax rates, which will reduce tax revenues collected.
Not necessarily. Bill Clinton passed the largest tax increase in US history and revenues went up throughout his presidency.
More
http://www.heritage.org/Research/Taxes/bg1957.cfm
Consequently, policymakers who assume that a rising tax burden would help close the gap between revenue and spending may end up with the worst of all worlds. Allowing the tax cuts to expire—and perhaps raising other taxes to boost revenue further—could lead to less-than-expected increases in tax revenue combined with less-than-expected economic growth.
The Real Crisis: Spending
There is a fiscal policy crisis, but it has little to do with revenues (or deficits). The real problem is the growing burden of federal spending. In the past five years, federal outlays have jumped from 18.5 percent of GDP to 20.6 percent of GDP. Regardless of how it is financed, federal spending transfers resources from the private sector of the economy to the government sector—which is why, using a broad definition, the size of government may be the best measure of the tax burden. When resources are transferred in this way, political factors rather than economic considerations increasingly shape the decisions influencing the allocation of labor and capital. The result is slower economic growth.[11]
However, the recent rise in spending is just the calm before the storm. The CBO estimates that entitlement spending on Medicaid, Medicare, and Social Security, if left unchecked, will more than double from 8 percent of GDP to over 19 percent by 2050. Depending on assumptions about revenues, interest rates, and other spending, entitlement spending could push total federal spending to nearly 50 percent of GDP by 2050, compared with just over 20 percent today. (See Chart 5).
Even that disturbing projection could be a significant underestimate, because it assumes that a growing burden of government will not affect economic performance, just as the CBO assumes that higher tax burdens have no impact on growth. The CBO simply assumes long-term growth of 2 percent annually, even if the burden of government doubles.
However, Europe’s stagnant welfare states offer disturbing evidence that the CBO’s assumption is misplaced. Higher levels of government spending are associated with slower economic growth, regardless of whether that spending is financed with taxes or debt. This means that the CBO’s long-run estimates are in all likelihood overly optimistic. If they are, and if Congress takes no significant action on entitlements, government spending could, under some assumptions, exceed 50 percent of GDP.
Of course!
No doubt about it 1
One more;
http://www.heritage.org/Research/Taxes/bg1957.cfm
A rising tax burden will directly discourage investment and work, but an indirect effect will likely make the spending problem worse. Sometimes referred to as the “feed the beast” hypothesis, the worry is that rising revenues will relieve pressure on lawmakers to confront entitlements and reduce their resistance to other spending demands.
the prime point on the laffer curve for each tax type, class, and bracket
The Laffer Curve: Past, Present, and Future
http://www.heritage.org/Research/Taxes/bg1765.cfm
Theory Basics
The basic idea behind the relationship between tax rates and tax revenues is that changes in tax rates have two effects on revenues: the arithmetic effect and the economic effect. The arithmetic effect is simply that if tax rates are lowered, tax revenues (per dollar of tax base) will be lowered by the amount of the decrease in the rate. The reverse is true for an increase in tax rates. The economic effect, however, recognizes the positive impact that lower tax rates have on work, output, and employment—and thereby the tax base—by providing incentives to increase these activities. Raising tax rates has the opposite economic effect by penalizing participation in the taxed activities. The arithmetic effect always works in the opposite direction from the economic effect.
~dot.com~ After that pop we inherited a rather sluggish economy that the tax cuts of 2003-2007 helped tremendously.
IMHO
>>>~dot.com~ After that pop we inherited a rather sluggish economy that the tax cuts of 2003-2007 helped tremendously.
As Clinton benefited from the dot.com bubble, Bush benefited from the housing bubble.
No doubt, but I deal in commercial building. While new home starts have declined, orders for equipment in my sector have increased.
It never is just one sector that makes an economy fly. The reason I mentioned Clinton is I’ve never quite figured out how he got so much credit for the 90’s. Cutting the military by billions with “peace time budget overages” shouldn’t be considered brilliant by any means.
No one seems to give the Congress of 1994 any credit for his success.
Are you voting for Hillary? /s
>>>No doubt, but I deal in commercial building. While new home starts have declined, orders for equipment in my sector have increased.
Yes. But consumer spending drives 70% of the economy. With housing prices rising, mortgage equity withdrawals advanced rapidly and consumers went on a spending spree that may have contributed to revenue growth in the 2003-2007 time period. Note that with home prices falling, governments are talking about slower or negative revenue growth.
>>>Are you voting for Hillary? /s
Definitely not. I don’t think we need another Clinton or Bush in the White house any time this century.
Agreed FRiend!
Regarding home prices, I for one am glad they are coming back a bit. No way is my home worth 200% more than I bought it for in 2001!
People rode a wave of unrealistic real estate over valuation for 5 years. Reality sucks but it is still reality!
agreed.
small differences in the tax rate do not make that much of a difference in the overall scheme. 5% one way or the other on the top income or capital gains rates mean very little (in macroeconomic terms), other than a drop or an increase in the budget in the next fiscal year
revenues always go up over a period of years, due to economic growth, unless there is a major economic depression.
The revenues doubled in the 1950s and 1960s even though tax rates were much higher.
This should be corrected to read:
The basic idea behind the relationship between income tax rates and income tax revenues is that changes in income tax rates have two effects on revenues: the arithmetic effect and the economic effect. The arithmetic effect is simply that if income tax rates are lowered, tax revenues (per dollar of tax base) will be lowered by the amount of the decrease in the rate. The reverse is true for an increase in income tax rates. The economic effect, however, recognizes the positive impact that lower income income tax rates have on work, output, and employment—and thereby the tax base—by providing incentives to increase these activities. Raising income tax rates has the opposite economic effect by penalizing participation in the taxed activities. The arithmetic effect always works in the opposite direction from the economic effect.
We should do away with all of the social engineering inherent in the income tax system and tax consumption instead!
More;
http://www.heritage.org/Research/Taxes/bg1765.cfm
Because tax cuts create an incentive to increase output, employment, and production, they also help balance the budget by reducing means-tested government expenditures. A faster-growing economy means lower unemployment and higher incomes, resulting in reduced unemployment benefits and other social welfare programs.
Next paragragh;
http://www.heritage.org/Research/Taxes/bg1765.cfm
Over the past 100 years, there have been three major periods of tax-rate cuts in the U.S.: the Harding-Coolidge cuts of the mid-1920s; the Kennedy cuts of the mid-1960s; and the Reagan cuts of the early 1980s. Each of these periods of tax cuts was remarkably successful as measured by virtually any public policy metric.
The problem isn’t with revenue. The problem is that at a time when federal revenue has never been higher, federal spending still exceeds revenue by hundreds of billions of dollars every year.
Lets see CNN bring up President Kennedy like this;
http://www.heritage.org/Research/Taxes/bg1765.cfm
Kennedy reiterated his beliefs in his Tax Message to Congress on January 24, 1963:
In short, this tax program will increase our wealth far more than it increases our public debt. The actual burden of that debt—as measured in relation to our total output—will decline. To continue to increase our debt as a result of inadequate earnings is a sign of weakness. But to borrow prudently in order to invest in a tax revision that will greatly increase our earning power can be a source of strength.
Agreed, Politicians all agree to the add to the spending excesses, so it’s time Americans demand low reasonable tax rates without regard to what the Politicians are going to do. I suggest outlawing double digit taxation as a start.
Good.
Yes, they do, incessantly, but no one (except me) ever points out that that's a bad thing.
The point of tax cutting, circa 1978, was NOT to make the Federal monster grow fatter and our people more servile and dependent.
The point was to STARVE THE BEAST, and thus shrink government.
This has not happened. The theory (that's all it was) has been falsified. And a new mythology has sprung up, saying that taxes should be cut FOR THE PURPOSE of allowing the government to grow fatter, faster.
I want nothing to do with it. If tax cuts cause government revenues to grow, then tax cuts are bad. Period.
If tax cuts cause government revenues to grow, then tax cuts are bad.
Yes, one point is the folks who earn the money should not have it taken away in high tax rates.
Federal Government Politicians who voted YES on NON-Federal spending should recalled to be make up the difference to the American people by confiscating their assets and retirement plans up to the level of their mismanaged allocations.
bump
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