Higher Taxes, Lower Revenue

[Wild Cobra]

http://si.wsj.net/public/resources/images/ED-AN743D_Reyno_G_20110615184205.jpg (http://online.wsj.com/article/SB10001424052702304259304576375951025762400.html)

Article linked to graphic.

[boutons_deux]

Tax cuts NEVER pay for themselves.

Not even a question anymore except for economists who get paid by the Repugs or VRWC.

Tax cut policies have the objective of starving the beast with reduced revenues. That's working beautifully.

[ChumpDumper]

http://si.wsj.net/public/resources/images/ED-AN743D_Reyno_G_20110615184205.jpg (http://online.wsj.com/article/SB10001424052702304259304576375951025762400.html)

Article linked to graphic.Why didn't they just post the revenues themselves, WC? Or the changes in revenue for each of these years?

Looks pretty cherry picked tbh.

[mookie2001]

Tax cuts NEVER pay for themselves.

Not even a question anymore except for economists who get paid by the Repugs or VRWC.

Tax cut policies have the objective of starving the beast with reduced revenues. That's working beautifully.

yeah no joke, this theory has been proven wrong in real life, the world we live in

[ElNono]

Why is the metric GDP, which isn't constant throughout those years? Heck, it's not even linear going up.

Let's see dollar figures, and actual numbers of taxpayers.

[ElNono]

That said, I acknowledge that trying to tax 'the rich' is an exercise in futility. They simply work their way through loopholes to pay what they want. If they're not paying now at whatever rate it is, raising the rate won't make much of a difference.

[ElNono]

Next time please point out this comes from Cato so I can avoid wasting my time. Thanks.

[ElNono]

Oh, and did you read the comments on that article? :lol

[DMX7]

This is how the rich just keep getting richer.. by tricking idiots like WC who aren't smart enough to critically interpret statistics, and then they have these minions (aka parts changers) fight for them and against themselves.

[ElNono]

How the Pros do it:

http://video.nytimes.com/video/2011/06/19/business/100000000870844/inside-the-accountants-playbook.html?hp

[ElNono]

Related:

Companies Push for Tax Break on Foreign Cash (http://www.nytimes.com/2011/06/20/business/20tax.html?_r=1&hp)

[RandomGuy]

Why didn't they just post the revenues themselves, WC? Or the changes in revenue for each of these years?

Looks pretty cherry picked tbh.

They are.

This schtick has been debunked a long time ago.

It is akin to the science-y kind of stuff you find on creationist websites, that give the ignorant "true-believers" something that they can cling to and reinforce their pre-existing beliefs. Then the believers go out into the wide world, and get their science-y bullshit shredded by people who actually understand the science.

It is the worst kind of lie, because it uses a modicum of truth, but very, very carefully leaves out the part of the truth that overwhelmingly refutes the original premise.

[RandomGuy]

http://si.wsj.net/public/resources/images/ED-AN743D_Reyno_G_20110615184205.jpg (http://online.wsj.com/article/SB10001424052702304259304576375951025762400.html)

Article linked to graphic.


Mr. Reynolds is a senior fellow with the Cato Institute and the author of "Income and Wealth"

Right wing hack, so therefore you can't believe anthing he says.

[boutons_deux]

1000 Mass. Ave NW.Washington, DC 20001
Phone: 202-842-0200
Fax: 202-842-3490

The Cato Institute, a libertarian think tank based in Washington DC, was founded in 1977 by Edward Crane and Charles Koch, the billionaire co-owner of Koch Industries, the largest privately held oil company in the U.S.

http://www.exxonsecrets.org/html/orgfactsheet.php?id=21

==========

Cato is nothing but a Kock-sucking mouthpiece for the VRWC.

[2centsworth]

Ad homonym attacks are funny. Spending
StimulTes growth.:thus, Increasing long-term
Tax revenue.

Arguing whether the spending should come from
The government, the rich, or the middle class
Is a totally different argument.

I would argue we need tax cuts for the middle class.

Businesses aren't creating jobs because "customers"
Are scarce. Help the customer and business will
Pick-up.

[ElNono]

The problem is that with the job outlook as it is, it's hard to fathom people going on a spending spree.

[2centsworth]

The problem is that with the job outlook as it is, it's hard to fathom people going on a spending spree.

Jobs are created because of customer demand. One
Step at a time. Let's help the customers that have jobs
Are watch confidence and the job market turn around.

[ElNono]

I can agree with customer demand creating some jobs. Not necessarily agree they would be US jobs though.

[TeyshaBlue]

I can agree with customer demand creating some jobs. Not necessarily agree they would be US jobs though.

Exactly. :toast

[RandomGuy]

Ad homonym attacks are funny. Spending
StimulTes growth.:thus, Increasing long-term
Tax revenue.

Arguing whether the spending should come from
The government, the rich, or the middle class
Is a totally different argument.

I would argue we need tax cuts for the middle class.

Businesses aren't creating jobs because "customers"
Are scarce. Help the customer and business will
Pick-up.

I am glad somebody picked up on the ad hominem thing. I was beginning to lose hope that anybody would call me on it.

The guy is not wrong because he is a fellow of the Cato institute. He is wrong because he is a lying sack of shit, who is misrepresenting data in a deliberately misleading way.

Middle class doesn't spend much in taxes to begin with, especially on a federal level.

The article in the OP is a shitty attempt to counter this:

Ro
bert Reich: As Americans get ready to file their taxes, politicians are battling over how much to cut government spending in order to reduce huge deficits. Curiously though, one option for deficit reduction seems to be off the table. That's to raise taxes on the very rich.

For decades now, America's top earners have been pulling in a larger and larger share of the nation's total income. Over the same period though, their tax rates have steadily declined. In the 1950s, the top marginal income tax rate was 91 percent. Now it's 35 percent. Even when you include deductions and credits, the super-rich are now paying a far lower portion of their incomes in taxes than at any time since World War II.

Meanwhile, capital gains and dividends -- a big chunk of their income -- were taxed at 35 percent as recently as the late 1980s. Now, they're taxed at 15 percent. And the estate tax has now vanished for estates under $5 million or $10 million a couple.

If the rich were taxed at the same rates they were taxed a half century ago, they'd be paying some $350 billion more this year in federal taxes. That would be trillions of dollars over the next decade -- a major contribution to eliminating the deficit.

Now yes, of course, clever accountants and tax lawyers would find ways around any tax increases, but this was always the case.

The real difference between now and then is the political power of the super-rich is much greater. After all, that's why their tax rates are so much lower.

But it's just possible that the devastating budget squeezes in Washington and in state capitals, and the slashing of public services vital to the middle class and the poor, may prompt Americans to look back 50 years -- and ask why the super-rich shouldn't pay the same tax rates now as they did then.

The one thing that the OP didn't want you to know, is that the only group who has seen its earning power grow in the last 20 years to any degree are the people at the top. This inconvient truth is neatly-side stepped.

We have had this discussion ad infinitum here, and it is the one thing that kills the "give the rich more money and we all benefit" schtick DOA.

[RandomGuy]

Ad homonym attacks are funny. Spending
StimulTes growth.:thus, Increasing long-term
Tax revenue.

Arguing whether the spending should come from
The government, the rich, or the middle class
Is a totally different argument.

I would argue we need tax cuts for the middle class.

Businesses aren't creating jobs because "customers"
Are scarce. Help the customer and business will
Pick-up.

Consumer spending is not happening because of a couple of reasons.

People have less access to credit.
People are saving more and borrowing less anyways, somewhat forced into doing that by the fact that credit is tighter (and rightly so, IMO).

We don't need to cut taxes when we have massive deficits. We borrow too much already, and that has to be scaled back.

[Wild Cobra]

I can agree with customer demand creating some jobs. Not necessarily agree they would be US jobs though.
The problem is most manufacturing is elsewhere. Until we return t6o having a better manufacturing base, we will remain a weakened economy.

[RandomGuy]

The problem is most manufacturing is elsewhere. Until we return t6o having a better manufacturing base, we will remain a weakened economy.

A better manufacturing base would not exactly lead to a better economy.

Manufacturing activity in the US generally doesn't lead to a lot of jobs, because it tends to be highly automated.

On the other hand, it would certainly give unions a lot more prospective members. :stirpot: Yeah, I went there.

[LnGrrrR]

The problem is most manufacturing is elsewhere. Until we return t6o having a better manufacturing base, we will remain a weakened economy.

Maybe we should only let manufacturing CEOs be taxed at the current rates then :)

[boutons_deux]

"we will remain a weakened economy."

so be it. US corps create more jobs, manufacturing or services, in low-wage, polluted, no-labor-security, no-benefits countries than they do in USA. UCA wanted globalization over the past 30 years for that very reason, to pit "over priced" American workers against cheap foreigners.

Even with the relatively weak dollar, USA can't export itself out of the depression (although is still exports a hell of a lot) because, eg, China's "industrial policy" of an artificially weak currency wins.

The free market and capitalism nows sucks for all Americans except the very top.

[2centsworth]

Consumer spending is not happening because of a couple of reasons.

People have less access to credit.
People are saving more and borrowing less anyways, somewhat forced into doing that by the fact that credit is tighter (and rightly so, IMO).


You are right, spenders have less money to spend.
Hence, I favor tax cuts for spenders i.e. Middle
Class.



We don't need to cut taxes when we have massive deficits. We borrow too much already, and that has to be scaled back. spending stimulates growth.
We need a middle class tax cut. Also. FICA is a huge middle class tax.

[RandomGuy]

The much-vaunted Republican pledge not to raise any taxes is crumbling. Today 34 Senate Republicans voted to end the special tax breaks for ethanol.



According to no-tax-increase purists like Grover Norquist, this is tantamount to a tax increase.

The truth is, Republicans are divided between those who want to bring down the budget deficit and those who want to shrink government. Ending a special tax subsidy helps reduce the deficit but doesn’t necessarily shrink government. That’s why Norquist and his followers have insisted any such tax increase – including even the closing of tax loopholes – be directly linked to a corresponding tax cut.

In order to save face on today’s vote, Norquist says renegade Republicans will still be considered to have adhered to the pledge if they vote in favor of an amendment offered by Senator Jim DeMint to eliminate the estate tax. Talk about grasping at straws. DeMint’s amendment isn’t even up for a vote.

In short, the no-tax pledge is evaporating in the fresh air of reality.

What are anti-tax Republicans to do now?

For one, continue to distort the arguments of those who believe corporations and the rich should pay more taxes.

For example, in the lead op-ed piece in today’s Wall Street Journal, Cato Institute fellow Alan Reynolds claims a higher marginal tax on the super rich will bring in less revenue.

Reynolds uses my tax proposal from last February as his red herring. “Memo to Robert Reich,” he declares, “The income tax brought in less revenue when the highest rate was 70 percent to 91 percent [between 1950 and 1980] than it did when the highest rate was 28 percent.”

Reynolds bends the facts to make his case, picking and choosing among years.

In truth, the most important variable explaining the rise and fall of tax revenues as percent of GDP has been the business cycle, not the effective tax rate. In periods when the economy is growing briskly, tax revenues have risen as a percent of GDP, regardless of effective rates; in downturns, revenues have fallen.

Reynolds also distorts my proposal, implying that the bracket on which I call for a 70 percent tax is the same as in today’s tax code. Wrong. My proposed 70 percent rate would apply only to incomes over $15 million.

$15 million, Alan!

Under my proposal, incomes between $5 million and $15 million would be subjected to a 60 percent rate, and incomes between $500,000 and $5 million to a 50 percent rate.

Importantly, my proposal calls for a substantial rate reduction for families with incomes under $100,000. (Conveniently, Reynolds fails to mention this.)

Reynolds entirely ignores my central argument, which is that rather than depress economic growth, higher taxes on the rich correlate with higher growth. During almost three decades spanning 1951 to 1980, when the top rate was between 70 percent and 91 percent, average annual growth in the American economy was 3.7 percent.

Between 1983 and the start of the Great Recession, when the top rate dropped to between 35 percent and 39 percent, average growth was 3 percent.

How to explain this? Easy.

Since the early 1980s, a larger and larger share of total income has gone to the top (the richest 1 percent of Americans got 10 percent of total income in 1980, and get over 20 percent now). That’s left the vast middle class with insufficient purchasing power to boost the economy – without going deep into debt.

Lower tax rates on the rich — including lower capital gains rates — have exacerbated this regressive trend.

Finally, having misread the facts, distorted my proposal, and ignored my argument, Reynolds fails to rebut my conclusion that raising middle class purchasing power by lowering their tax rates while raising the rates at the top will help spur growth, to the benefit of all. Top earners will do better with a smaller share of a more rapidly- growing economy a larger share of a slower-growing one.

If I were a cynic, I’d say the Republican right is showing signs of desperation.

http://www.csmonitor.com/Business/Robert-Reich-s-Blog/2011/0617/The-growing-desperation-of-the-don-t-raise-taxes-on-the-rich-crowd

[RandomGuy]

You are right, spenders have less money to spend.
Hence, I favor tax cuts for spenders i.e. Middle
Class.

spending stimulates growth.
We need a middle class tax cut. Also. FICA is a huge middle class tax.

I don't mind as long as the revenues are made up somewhere else, i.e. higher marginal tax rates for the wealthy. More than made up for, in this case, because we need to bring overall debt to something a bit more sustainable.

[ElNono]

The problem is most manufacturing is elsewhere. Until we return t6o having a better manufacturing base, we will remain a weakened economy.

It's not just manufacturing. It's also services, which other countries do too now for a fraction of the cost. At the end of the day, people in other countries have much lower cost of living AND much lower standards of living.

It's either them eventually raising to the top, or us racing to the bottom...

[Wild Cobra]

This again about increasing the tax rates for the top.

Who does it affect? Chapter S businesses, movie stars, sports starts, etc. It's an income tax. The rich in general don't have an income tax that falls under taxable income. They have capital gains and dividends.

[Wild Cobra]

It's not just manufacturing. It's also services, which other countries do too now for a fraction of the cost. At the end of the day, people in other countries have much lower cost of living AND much lower standards of living.

It's either them eventually raising to the top, or us racing to the bottom...
Yep, we want more service jobs like McDonald's, Bellhops, Waitresses etc.

Why is it an us against them? Wealth is not a zero sum game. Take them down, we go down too.

Ever get a regular middle class wage job from another middle class worker? If we tax the hell out of the rich and siphon their money, who will higher us?

[ChumpDumper]

This again about increasing the tax rates for the top.

Who does it affect? Chapter S businesses, movie stars, sports starts, etc. It's an income tax. The rich in general don't have an income tax that falls under taxable income. They have capital gains and dividends.1) Then what's the problem with raising them?

2) Which blog did you lift that from?

[ElNono]

Yep, we want more service jobs like McDonald's, Bellhops, Waitresses etc.

Why is it an us against them? Wealth is not a zero sum game. Take them down, we go down too.

No. I'm talking about specially qualified services, such as computer programming, IT services, and the like. Something the US economy thrived on back in the 90's.

And it's us against them because while wealth isn't a zero sum game, it also isn't this infinite pool that can just be twisted at will at any given time. Which is the reason everyone isn't wealthy, and there's actual competition for wealth.
Our current cost of living and living standards are simply not competitive with other countries for a good chunk of jobs.

[boutons_deux]

"Wealth is not a zero sum game"

If you actually looked at the distribution of wealth and growthing inequality since St Ronnie got into office, wealth is pretty much a zero sum game, with the top taking nearly all the gains in wealth the past 30 years, while the non-top stagnated.

[RandomGuy]

This again about increasing the tax rates for the top.

Who does it affect? Chapter S businesses, movie stars, sports starts, etc. It's an income tax. The rich in general don't have an income tax that falls under taxable income. They have capital gains and dividends.

That made my eyes bleed.

Please don't ever prepare anybody elses taxes.

capital gains = income on this planet, and especially in the US tax code.

[Agloco]

From the Comments:



"You can't pay the Surgeon and the Janitor the same or your begging for disruption in the quality of healthcare services."

Rebuttal:


But you *can* encourage the surgeon to work just 10 or 20 hours per week so their income is just $80,000 per year instead of $200,000, so they have both the time and a financial reason to spend 20 seconds evaluating a non-branded alternative product that costs half as much as the one advertised on TV.

:lol

[ElNono]

This again about increasing the tax rates for the top.

Who does it affect? Chapter S businesses, movie stars, sports starts, etc. It's an income tax. The rich in general don't have an income tax that falls under taxable income. They have capital gains and dividends.

Then capital gains and dividends should be taxed appropriately.

Like i said earlier though, it's hard to tax these people when their accountants include people that wrote the tax code themselves. The real solution to this problem has little to do with percentages, IMO, but actually closing the loopholes that allow these people avoid taxes or shelter money out of country for sales in the US.

[Wild Cobra]

That made my eyes bleed.

Please don't ever prepare anybody elses taxes.

capital gains = income on this planet, and especially in the US tax code.
Is capital gains taxed at a marginal rate?

[RandomGuy]

Is capital gains taxed at a marginal rate?

Capital gains are not taxed at marginal rates.

They are also considered "income".

"all income no matter how derived" is taxable. The only thing that differs is how it is taxed, and at what rates.

I think that a dollar from capital gains makes you just as well off as a dollar of earned income, and should be taxed accordingly.

Preferential treatment is given to capital gains over earned income at the moment, and that distortion favors the rich who get most of their income that way.

(edit)
Some data:


Gross income in United States tax law is receipts and gains from all sources less cost of goods sold. Gross income is the starting point for determining Federal and state income tax of individuals, corporations, estates and trusts, whether resident or nonresident.[1]

"Except as otherwise provided" by law, Gross income means "all income from whatever source," and is not limited to cash received. However, tax regulations expand on this and say "all income from whatever source derived, unless excluded by law." The amount of income recognized is generally the value received or which the taxpayer has a right to receive. Certain types of income are specifically excluded from gross income.

The time at which gross income becomes taxable is determined under Federal tax rules, which differ in some cases from financial accounting rules.

http://en.wikipedia.org/wiki/Gross_income

(although my knowledge of the subject comes from the graduate level income tax class I took, it jibes with the wiki entry)

Defining "income" is a *very* important thing when it comes to taxes.

[2centsworth]

I don't mind as long as the revenues are made up somewhere else, i.e. higher marginal tax rates for the wealthy. More than made up for, in this case, because we need to bring overall debt to something a bit more sustainable.

I would argue that the tax cuts would lead
To an increase in long-term tax revenues, so the reason
You give for increasing income taxes on the
High income earner would be invalid. Nevertheless,
Since the wealthy tend to hoard, there should be
An incentive for them to invest. Now an improving
Economy would provide incentive to invest in jobs, but
I also believe slightly higher income tax rates
For the wealthy would help the municipal bond market.

My 2cents

[RandomGuy]

I would argue that the tax cuts would lead
To an increase in long-term tax revenues, so the reason
You give for increasing income taxes on the
High income earner would be invalid. Nevertheless,
Since the wealthy tend to hoard, there should be
An incentive for them to invest. Now an improving
Economy would provide incentive to invest in jobs, but
I also believe slightly higher income tax rates
For the wealthy would help the municipal bond market.

My 2cents

You can argue that, I guess. In the same manner you can argue that leaving apples on your front step will make unicorns happy.

Answer this question then:

How much does one dollar in tax cuts produce in extra revenue in 5 years? 10?

Quantify it.

The economists who attempted to guage the Bush tax cuts came up with the answer "almost nothing, and the amount that we had to borrow to finance this almost nothing outweighed the benefits in the long run".

Sorry. That bit of rhetoric is "feel good" with little to no data to support it.

There is some fairly solid support for taxing the rich, who generally pay 15%-20% or less on their earnings, and using that for big bad entitlements for the poor who actually go out and spend it.

The money the poor spend tend to lead to a lot more jobs anyways, as that money circulates through the economy.

People like to think that the government, its employees, and so forth, aren't actually part of the economy. They are, and the money the government spends gets into the economy and ends up in businesses and the like already.

Lastly:
Yes, raising capital gains taxes on the rich will help the muni market. That market is actually protected pretty clearly by the constitution.

[2centsworth]

You can argue that, I guess. In the same manner you can argue that leaving apples on your front step will make unicorns happy.

Answer this question then:

How much does one dollar in tax cuts produce in extra revenue in 5 years? 10?

Quantify it.

The economists who attempted to guage the Bush tax cuts came up with the answer "almost nothing, and the amount that we had to borrow to finance this almost nothing outweighed the benefits in the long run".

You are mixing apples and oranges. Having a well calculated sale at your business
Increases income in down markets. Thus, increasing the velocity of money.

Giving a business owner money has little affect on velocity.

The rhetoric and condesention is coming from you.


Sorry. That bit of rhetoric is "feel good" with little to no data to support it.

There is some fairly solid support for taxing the rich, who generally pay 15%-20% or less on their earnings, and using that for big bad entitlements for the poor who actually go out and spend it.

The money the poor spend tend to lead to a lot more jobs anyways, as that money circulates through the economy.

People like to think that the government, its employees, and so forth, aren't actually part of the economy. They are, and the money the government spends gets into the economy and ends up in businesses and the like already.

Lastly:
Yes, raising capital gains taxes on the rich will help the muni market. That market is actually protected pretty clearly by the constitution.[/QUOTE]

[RandomGuy]

You are mixing apples and oranges. Having a well calculated sale at your business
Increases income in down markets. Thus, increasing the velocity of money.

Giving a business owner money has little affect on velocity.

The rhetoric and condesention is coming from you.

I was merely pointing out that your argument was not based on information, merely ideological dogma.

Being able to "argue" something, and being able to support it reasonably with data are two seperate things.

Quite frankly, I am not entirely sure what you are trying to say here. It seems you are simply trying to repeat the "don't raise taxes on the rich" bit.

The "reason" for increasing taxes on the rich is so we don't have to borrow as much to pay for government.

Borrowing, in the long run, leads to higher tax rates.

If you want lower long term tax rates, you have to pay down the debt. That will require short-term hikes.

Cutting taxes at a time of low revenues, when you are already borrowing money, simply means you have to borrow even more.

Given the infrastructure deterioriation in this country, if we don't raise taxes to address the problem, that *will* lead to long term reductions in revenues, as our creaking infrastructure gets more and more expensive and costly to stick band-aids on. Expensive in terms of actual costs, and in terms of lost economic output.

"Tax cuts" are not the solution to our looming problems, not matter how many times someone says it.

[Borat Sagyidev]

http://www.usatoday.com/money/perfi/taxes/2010-05-10-taxes_N.htm

Tax bills in 2009 at lowest level since 1950


Amid complaints about high taxes and calls for a smaller government, Americans paid their lowest level of taxes last year since Harry Truman's presidency, a USA TODAY analysis of federal data found.
Some conservative political movements such as the "Tea Party" have criticized federal spending as being out of control. While spending is up, taxes have fallen to exceptionally low levels.

Federal, state and local income taxes consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12% for the last half-century. The overall tax burden hit bottom in December at 8.8.% of income

[2centsworth]

I was merely pointing out that your argument was not based on information, merely ideological dogma.

Being able to "argue" something, and being able to support it reasonably with data are two seperate things.

Quite frankly, I am not entirely sure what you are trying to say here. It seems you are simply trying to repeat the "don't raise taxes on the rich" bit.

The "reason" for increasing taxes on the rich is so we don't have to borrow as much to pay for government.

Borrowing, in the long run, leads to higher tax rates.

If you want lower long term tax rates, you have to pay down the debt. That will require short-term hikes.




Impossible for me to respond from my iPhone.
I'll try when I'm in front of a pc


Cutting taxes at a time of low revenues, when you are already borrowing money, simply means you have to borrow even more.

Given the infrastructure deterioriation in this country, if we don't raise taxes to address the problem, that *will* lead to long term reductions in revenues, as our creaking infrastructure gets more and more expensive and costly to stick band-aids on. Expensive in terms of actual costs, and in terms of lost economic output.

"Tax cuts" are not the solution to our looming problems, not matter how many times someone says it.

[Agloco]

http://www.usatoday.com/money/perfi/taxes/2010-05-10-taxes_N.htm

Tax bills in 2009 at lowest level since 1950


Amid complaints about high taxes and calls for a smaller government, Americans paid their lowest level of taxes last year since Harry Truman's presidency, a USA TODAY analysis of federal data found.
Some conservative political movements such as the "Tea Party" have criticized federal spending as being out of control. While spending is up, taxes have fallen to exceptionally low levels.

Federal, state and local income taxes consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12% for the last half-century. The overall tax burden hit bottom in December at 8.8.% of income

I'd like to see exactly who is paying less in taxes and a breakdown by income level. Anyone have quick access to that?

[ElNono]

There's no such thing as tax breaks that pay for themselves. We can go back years and years of data that shows that whenever you cut taxes, receipts decrease. What also needs to be understood is that unless you make up the difference in some other way, you'll be making up the difference by borrowing, which means you'll have to pay that back with interest. Meaning the tax cut perfomance over time will have to outdo not just the lost revenue year over year, but also the interest from having to borrow to make up for the difference. In the real world, this just doesn't happen.

I mean, if we're going to just gamble with borrowed money, it's probably just as good as any other gamble (stimulus, etc)

[Wild Cobra]

Capital gains are not taxed at marginal rates.

They are also considered "income".

So you agree that raising the marginal tax rate does not affect those making income from capital gains. Right?

[boutons_deux]

high taxes causes corporations to invest and spend their profits rather send the lower taxed profits to mgmt and investors.

very high taxes in the 50/60s didn't impede an explosion in national wealth and public infrastructure.

[boutons_deux]

The Myth of the Lower Marginal Tax Rates
Conservatives’ Go-To Growth Solution Doesn’t Hold Up

http://www.americanprogress.org/issues/2011/06/img/marginal_tax_chart.jpg

These numbers do not mean that higher rates necessarily lead to higher growth. But the central tenet of modern conservative economics is that a lower top marginal tax rate will result in more growth, and these numbers do show conclusively that history has not been kind to that theory.

http://www.americanprogress.org/issues/2011/06/marginal_tax_charticle.html

[RandomGuy]

Impossible for me to respond from my iPhone.
I'll try when I'm in front of a pc

I kinda figured that after the first post or so. No problems mate. :toast

[RandomGuy]

I'd like to see exactly who is paying less in taxes and a breakdown by income level. Anyone have quick access to that?

I can probably dig it up for you at some point in the next day or two.

[RandomGuy]

So you agree that raising the marginal tax rate does not affect those making income from capital gains. Right?

aaaaah, *that's* what you were trying to say. Gotcha.

That is essentially correct, yes.

At some point, very very few people have earned income from a job that pays more than 10,000,000+ per year or so. NBA, NFL, CEO, CFO, etc.

Most people with really really high incomes get their money from investments.

Oprah will be set, even after "retiring". :lol

[Winehole23]

No, Gov. Pawlenty, Tax Cuts Don't Pay for Themselves

19 Jun 2011
Posted by Bruce Bartlett
 http://capitalgainsandgames.com/files/pictures/picture-7.jpg
Republicans claim to be deeply concerned about the budget deficit and the national debt, yet repeatedly demand additional large tax cuts. For example, former Minnesota Gov. Tim Pawlenty, a candidate for the Republican presidential nomination, supports a balanced budget amendment to the Constitution but also wants an $8 trillion tax cut (http://taxpolicycenter.org/numbers/displayatab.cfm?Docid=3049&DocTypeID=5). He rationalizes this contradiction by asserting that his tax cut will not actually lose any revenue. As Pawlenty told Slate reporter Dave Weigel (http://www.slate.com/blogs/blogs/weigel/archive/2011/06/13/pawlenty-bush-tax-cuts-didn-t-fully-serve-their-intended-purposes.aspx) on June 13:

“When Ronald Reagan cut taxes in a significant way, revenues actually increased by almost 100 percent during his eight years as president. So this idea that significant, big tax cuts necessarily result in lower revenues – history does not [bear] that out.”

In point of fact, this assertion is completely untrue. Federal revenues were $599.3 billion in fiscal year 1981 and were $991.1 billion in fiscal year 1989. That’s an increase of just 65 percent. But of course a lot of that represented inflation. If 1981 revenues had only risen by the rate of inflation, they would have been $798 billion by 1989. Thus the real revenue increase was just 24 percent. However, the population also grew. Looking at real revenues per capita, we see that they rose from $3,470 in 1981 to $4,006 in 1989, an increase of just 15 percent. Finally, it is important to remember that Ronald Reagan raised taxes 11 times, increasing revenues (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1766683) by $133 billion per year as of 1988 – about a third of the nominal revenue increase during Reagan’s presidency.

The fact is that the only metric that really matters is revenues as a share of the gross domestic product. By this measure, total federal revenues fell from 19.6 percent of GDP in 1981 to 18.4 percent of GDP by 1989. This suggests that revenues were $66 billion lower in 1989 as a result of Reagan’s policies.

This is not surprising given that no one in the Reagan administration ever claimed that his 1981 tax cut would pay for itself or that it did. Reagan economists Bill Niskanen and Martin Anderson have written extensively on this oft-repeated myth. Conservative economist Lawrence Lindsey made a thorough effort to calculate the feedback effect in his 1990 book, The Growth Experiment. He concluded that the behavioral and macroeconomic effects of the 1981 tax cut, resulting from both supply-side and demand-side effects, recouped about a third of the static revenue loss.

Republicans also assert that the tax cuts of the George W. Bush years paid for themselves. On July 13, 2010, Senate Minority Leader Mitch McConnell said (http://tpmdc.talkingpointsmemo.com/2010/07/its-unanimous-gop-says-pay-for-unemployment-benefits-not-tax-cuts-for-the-rich.php?ref=fpb) that there was no net revenue loss from any of the Bush tax cuts, in defense of an earlier comment (http://tpmdc.talkingpointsmemo.com/2010/07/kyl-unemployment-insurance-a-necessary-evil-1.php) by Senator John Kyl that all spending increases must be offset so as not to increase the deficit, but tax cuts need never be offset. Said McConnell:

“There's no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue, because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject.”

This is a view not shared by economists who worked for Bush. For example, Alan Viard, senior economist at the Council of Economic Advisers during Bush’s first term, told the Washington Post (http://www.washingtonpost.com/wp-dyn/content/article/2006/10/16/AR2006101601121.html) in 2006, “Federal revenue is lower today than it would have been without the tax cuts. There’s really no dispute among economists about that.” Robert Carroll, deputy assistant secretary for tax analysis at the U.S. Treasury Department during Bush’s second term, also told the Post, “As a matter of principle, we do not think tax cuts pay for themselves.” On September 28, 2006, Stanford economist Edward Lazear, chairman of the CEA in Bush’s second term, testified before the Senate Budget Committee:

“Will the tax cuts pay for themselves? As a general rule, we do not think tax cuts pay for themselves. Certainly, the data…do not support this claim. Tax revenues in 2006 appear to have recovered to the level seen at this point in previous business cycles, but this does not make up for the lost revenue during 2003, 2004, and 2005. The tax cuts were a positive step and have contributed to the enhanced economic growth, additional jobs, higher real disposable income, and the low unemployment rates that we currently see today.”

The truth is that no serious Republican economist has ever said that a tax rate reduction would recoup more than about a third of the static revenue loss. The following studies represent the generally accepted view among Republican economists.

● A 2005 Congressional Budget Office study (http://www.cbo.gov/ftpdocs/69xx/doc6908/12-01-10PercentTaxCut.pdf) during the time that Republican economist Doug Holtz-Eakin was director concluded that a 10 percent cut in federal income tax rates would recoup at most 28 percent of the static revenue loss over 10 years. And this estimate assumes that taxpayers have unlimited foresight and know that taxes will be raised after 10 years to stabilize the debt/GDP ratio. Without foresight and no compensating tax increases or spending cuts, leading to an increase in the debt, feedback would be negative; i.e., causing the actual revenue loss to be larger than the static revenue loss.

● In a 2006 article (http://dash.harvard.edu/bitstream/handle/1/2770515/Mankiw_DynamicScoring.pdf) published in the Journal of Public Economics, Harvard economist Greg Mankiw, who chaired the CEA during Bush’s first term, estimated the long-run revenue feedback from a cut in taxes on capital at 32.4 percent and 14.7 percent for a cut in labor taxes.

● A 2006 analysis (http://www.heritage.org/Research/Reports/2006/11/A-Dynamic-Analysis-of-the-2001-and-2003-Bush-Tax-Cuts-Applying-an-Alternative-Technique-for-Calibrating-Macroeconomic-and-Microsimulation-Models) of extending the 2001 and 2003 Bush tax cuts by the Republican-leaning Heritage Foundation estimated that only 30 percent of the gross revenue loss would be recouped through behavioral effects and macroeconomic stimulus.

For the record, the CBO recently concluded (http://www.cbo.gov/ftpdocs/121xx/doc12187/ChangesBaselineProjections.pdf) that the Bush tax cuts reduced federal revenues $2.8 trillion between 2002 and 2011.

In short, there is no evidence whatsoever supporting Gov. Pawlenty’s view of the Reagan tax cuts or Sen. McConnell’s view of the Bush tax cuts. They didn’t pay for themselves and there is no reason to think that further tax cuts will, either. Esteemed Republican economist Alan Greenspan confirmed this fact last year on “Meet the Press.” Asked whether he thought that tax cuts pay for themselves, as Republican leaders had said, Greenspan replied (http://www.msnbc.msn.com/id/38487969/ns/meet_the_press-transcripts/t/meet-press-transcript-august), simply, “They do not.”

Reprinted from the Fiscal Times (http://www.thefiscaltimes.com/)
http://capitalgainsandgames.com/blog/bruce-bartlett/2276/no-gov-pawlenty-tax-cuts-dont-pay-themselves

[boutons_deux]

The Debt Explosion In The Latest CBO Report Is Mainly Due To Lower Revenues

http://thinkprogress.org/wp-content/uploads/2011/06/lindenrevenue0628.jpg

This puts the lie to the frequent Republican refrain that we “have a spending problem, not a revenue problem.” In fact, we have a serious revenue problem. If we continue under current revenue policies, we really will have a debt crisis. On the other hand, if we stick closer to current law revenue levels, we can actually stabilize the debt without having to make damaging cuts to Medicare, Medicaid and Social Security.

http://thinkprogress.org/economy/2011/06/28/256351/chart-cbo-debt-revenue/

[coyotes_geek]

lol thinkprogress. lol boutons.

[boutons_deux]

cg: has nothing to say, GFY

[Agloco]

This puts the lie to the frequent Republican refrain that we “have a spending problem, not a revenue problem.” In fact, we have a serious revenue problem.

I notice how people want to jump on one side or the other (ie spending OR revenue).

Wouldn't be fair to say that there's a problem with both?

[coyotes_geek]

cg: has nothing to say, GFY

Okay, here's something to say. Neither the graph or the linked article offer any discussion, references, explainations or methodology behind how exactly they determined what percentage of the difference between baseline and alternative scenarios was attributable to revenue decreases and what percentage was due to spending increases. Seems like that would be worthwhile information to discuss, seeing as how the CBO report doesn't go in to any of that. But no, it's just "here's a graph we made that proves we're right".

Not to mention the article is trying to use a comparison between two separate economic scenarios as "proof" that not increasing taxes will cause bigger debts than not cutting spending will. All that comparison shows is that the alternative scenario has fewer revenue generating assumptions in it than the baseline scenario. The CBO could just as easily constructed a scenario where fewer spending cuts are assumed and end up with a graph where spending comprises the majority of the additional debt.

lol thinkprogress. lol boutons.

[boutons_deux]

"Wouldn't be fair to say that there's a problem with both?"

false equivalence.

Note that the debt problem started with tax cuts under Carter, and then really got going, as in tripled, under "conservative" St Ronnie the Useful Idiot, and exploded again with tax cuts under dubya.

And note that the spending cuts for Repugs and dickless Dems fall only on veterans, the old, the poor, the disabled, the sick, the unemployed, the unions, govt employees, etc.

The cuts in "tax expenditures" given to the capitalists and corps NEVER even get on the table.

[Wild Cobra]

Of course we have lower revenue, and it isn't because of lower tax rates. We are still in a government created recession.

History shows regardless of tax rates, the government averages 18.3% of GDP in revenue.

GDP down = tax receipts down.

[scott]

http://si.wsj.net/public/resources/images/ED-AN743D_Reyno_G_20110615184205.jpg (http://online.wsj.com/article/SB10001424052702304259304576375951025762400.html)

Article linked to graphic.

If I were the kind of moron who tried to use simplistic graphics without proper context to make points, I'd just say this:

97-02 had higher tax rates and much higher revenues than 88-92. Looks like higher tax rates win. kthxbai.

[scott]

But if I had half a brain, I'd just say:

Wow, this graph is worthless because it provides no context. Maybe I won't bother posting this nonsense.

[Wild Cobra]

I grabbed that chart just to start the thread with. This one illustrates what I have learned some years ago:

http://reason.com/assets/mc/ngillespie/2010_11/taxratevsgdpjpeg.jpg

The Remarkably Stable Amount of Federal Revenue as a Percentage of GDP (http://reason.com/blog/2010/11/29/the-remarkably-stable-amount-o)

[Winehole23]

What did you learn?

[ElNono]

What did you learn?

[boutons_deux]

"runaway spending" as percentage of GDP is same now as 1977.

What WC's misleading bullshit hides is that the tax burden has shifted dramatically from corporations and the wealthy to the lower 95%, just like the getting-organized VRWC intended 35 years ago. That's why the greedy, predatory, evermore-destructive and powerful VRWC is so intent on smearing FDR, and on destroying SS/Medicare/Medicaid.

[TeyshaBlue]

Okay, here's something to say. Neither the graph or the linked article offer any discussion, references, explainations or methodology behind how exactly they determined what percentage of the difference between baseline and alternative scenarios was attributable to revenue decreases and what percentage was due to spending increases. Seems like that would be worthwhile information to discuss, seeing as how the CBO report doesn't go in to any of that. But no, it's just "here's a graph we made that proves we're right".

Not to mention the article is trying to use a comparison between two separate economic scenarios as "proof" that not increasing taxes will cause bigger debts than not cutting spending will. All that comparison shows is that the alternative scenario has fewer revenue generating assumptions in it than the baseline scenario. The CBO could just as easily constructed a scenario where fewer spending cuts are assumed and end up with a graph where spending comprises the majority of the additional debt.

lol thinkprogress. lol boutons.

There's not alot of analysis going on @ thinkprogress. It's the Faux news of the moonbat left. No wonder boutons is addicted to them.:lol

[coyotes_geek]

"runaway spending" as percentage of GDP is same now as 1977.

What WC's misleading bullshit hides is that the tax burden has shifted dramatically from corporations and the wealthy to the lower 95%, just like the getting-organized VRWC intended 35 years ago. That's why the greedy, predatory, evermore-destructive and powerful VRWC is so intent on smearing FDR, and on destroying SS/Medicare/Medicaid.

The numbers don't support this. The percentage of taxes paid by the top 5% of earners has gone up significantly over the last 25 years. The tax burden has been shifting away from the lower 95%, not to it.

http://www.irs.gov/pub/irs-soi/08in05tr.xls (see last table)

The percentage of the population not owing any income taxes has also increased significantly over the last few decades. In the 70's & 80's that percentage was down in the low-20%'s, high teens. Now we're in the high-40%'s.

[admiralsnackbar]

It's only natural for businesses to seek strategic advantages, and for the hyper-rich to invest in the businesses that succeed. Even before NAFTA (and certainly after), the trend was already to farm out labor and manufacturing -- it's how me and my old man made our money.

Jobs leave, the % of people not contributing to the tax kitty rises, the tax burden on the rich increases, making them feel persecuted so they continue to invest in businesses that succeed, look for tax shelters, and lobby to diminish taxes. More jobs leave but the tax cuts go through so while the well-to-do are paying more in taxes, it is because they are earning so much more. Still not enough to stave off a deficit (even ignoring our adventurist wars).

More jobs leave, more insufficient taxation of the wealthy follows (in the sense that it doesn't cover the budget because unemployment is so high), more debt accumulates... rinse, repeat, merrily down the drain.

I know this is an awfully simplistic depiction of the cycle, and I certainly don't blame people for wanting to make money, but it ultimately confirms my suspicion that humans are destined for ruin when only a miniscule percentage of the ultra-wealthy are willing to invest in their own country (even if the returns are markedly lower) because they don't have the imagination to see the end-game of their choices.

I wish I could tell these short-sighted investors how much they will hate living in a failed state once the middle class actually does collapse, at which point they can choose between living in a paranoiac siege state in their home countries, or moving to Europe as exiles and losing the sense of home. Either option sucks.

How's that for a post-wet-lunch ramble? :lol

[Winehole23]

Not bad. :tu

[admiralsnackbar]

I'd like to thank my speech writers, Messrs Schweppes, Walker, and Rocks.

[coyotes_geek]

I'd like to thank my speech writers, Messrs Schweppes, Walker, and Rocks.

Messr Walker is a good friend of mine.

[TeyshaBlue]

Theyve written many a speech for me as well. Most of em were disasters.:depressed

[Agloco]

"Wouldn't be fair to say that there's a problem with both?"

false equivalence.

Note that the debt problem started with tax cuts under Carter, and then really got going, as in tripled, under "conservative" St Ronnie the Useful Idiot, and exploded again with tax cuts under dubya.

And note that the spending cuts for Repugs and dickless Dems fall only on veterans, the old, the poor, the disabled, the sick, the unemployed, the unions, govt employees, etc.

The cuts in "tax expenditures" given to the capitalists and corps NEVER even get on the table.

I understand the revenue argument. What I'm not getting is the spending argument.

In lay terms explain how you conclude that there isn't also a spending problem.

[Agloco]

I know this is an awfully simplistic depiction of the cycle, and I certainly don't blame people for wanting to make money, but it ultimately confirms my suspicion that humans are destined for ruin when only a miniscule percentage of the ultra-wealthy are willing to invest in their own country (even if the returns are markedly lower) because they don't have the imagination to see the end-game of their choices.

:tu

I've always said that it behooves the "haves" to keep the "have nots" happy. Simplistic as well, but that's my peak when it comes to economics. :lol

[boutons_deux]

In lay terms explain how you conclude that there isn't also a spending problem.

There IS a "tax expenditure" problem: tax breaks, rapid depreciation (corporate jets, etc), subsidies to the corps and wealthy.

Federal spending as %age of GDP is now where it was 30+ years ago, about 1977. Runaway? GMAFB, just another tea bagger/VRWC lie.

[Agloco]

There IS a "tax expenditure" problem: tax breaks, rapid depreciation (corporate jets, etc), subsidies to the corps and wealthy.

Federal spending as %age of GDP is now where it was 30+ years ago, about 1977. Runaway? GMAFB, just another tea bagger/VRWC lie.

Gotcha.

[Wild Cobra]

There IS a "tax expenditure" problem: tax breaks, rapid depreciation (corporate jets, etc), subsidies to the corps and wealthy.

Federal spending as %age of GDP is now where it was 30+ years ago, about 1977. Runaway? GMAFB, just another tea bagger/VRWC lie.

How do you figure? In 1977, the receipts were 18.0% of GDP. Outlays were 20.7%, for a 2.7% deficit. 2009 was 14.9%, 25%, -10%. 2010 was 14.9%, 23.8%, -8.9%.

Whitehouse/OMB: Table 1.2—Summary of Receipts, Outlays, and Surpluses or Deficits (-) as Percentages of GDP: 1930–2016 (http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/hist01z2.xls)

[ElNono]

How do you figure? In 1977, the receipts were 18.0% of GDP. Outlays were 20.7%, for a 2.7% deficit. 2009 was 14.9%, 25%, -10%. 2010 was 14.9%, 23.8%, -8.9%.

Whitehouse/OMB: Table 1.2—Summary of Receipts, Outlays, and Surpluses or Deficits (-) as Percentages of GDP: 1930–2016 (http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/hist01z2.xls)

How much did the GDP grow/shrink?

Post the dollar figures...

[Wild Cobra]

How much did the GDP grow/shrink?

Post the dollar figures...

GDP from previous linked table:

1977 1,973.5
2009 14,097.5
2010 14,508.2

Table 1.1—Summary of Receipts, Outlays, and Surpluses or Deficits (-): 1789–2016 (http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/hist01z1.xls); $millions:

1977 355,559, 409,218, -53,659
2009 2,104,989 3,517,677 -1,412,688
2010 2,162,724 3,456,213 -1,293,489

Happy?

Since you don't have excel, look here:

PDF of All tables (http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/hist.pdf)

[Wild Cobra]

How about this:

Year $Billions %receipts %outlay
1977 1,973.5 18.0 20.7
1978 2,217.5 18.0 20.7
1979 2,501.4 18.5 20.1
1980 2,724.2 19.0 21.7
1981 3,057.0 19.6 22.2
1982 3,223.7 19.2 23.1
1983 3,440.7 17.5 23.5
1984 3,844.4 17.3 22.2
1985 4,146.3 17.7 22.8
1986 4,403.9 17.5 22.5
1987 4,651.4 18.4 21.6
1988 5,008.5 18.2 21.3
1989 5,399.5 18.4 21.2
1990 5,734.5 18.0 21.9
1991 5,930.5 17.8 22.3
1992 6,242.0 17.5 22.1
1993 6,587.3 17.5 21.4
1994 6,976.6 18.0 21.0
1995 7,341.1 18.4 20.6
1996 7,718.3 18.8 20.2
1997 8,211.7 19.2 19.5
1998 8,663.0 19.9 19.1
1999 9,208.4 19.8 18.5
2000 9,821.0 20.6 18.2
2001 10,225.3 19.5 18.2
2002 10,543.9 17.6 19.1
2003 10,979.8 16.2 19.7
2004 11,685.6 16.1 19.6
2005 12,445.7 17.3 19.9
2006 13,224.9 18.2 20.1
2007 13,891.8 18.5 19.6
2008 14,394.1 17.5 20.7
2009 14,097.5 14.9 25.0
2010 14,508.2 14.9 23.8

[Wild Cobra]

I think this one is very important:

Table 7.1—Federal Debt at the End of Year: 1940–2016 (http://www.whitehouse.gov/sites/default/files/omb/budget/fy2012/assets/hist07z1.xls):

Debt in $millions:
Year Debt Deficit
1940 50,696
1941 57,531 -6,835
1942 79,200 -21,669
1943 142,648 -63,448
1944 204,079 -61,431
1945 260,123 -56,044
1946 270,991 -10,868
1947 257,149 13,842
1948 252,031 5,118
1949 252,610 -579
1950 256,853 -4,243
1951 255,288 1,565
1952 259,097 -3,809
1953 265,963 -6,866
1954 270,812 -4,849
1955 274,366 -3,554
1956 272,693 1,673
1957 272,252 441
1958 279,666 -7,414
1959 287,465 -7,799
1960 290,525 -3,060
1961 292,648 -2,123
1962 302,928 -10,280
1963 310,324 -7,396
1964 316,059 -5,735
1965 322,318 -6,259
1966 328,498 -6,180
1967 340,445 -11,947
1968 368,685 -28,240
1969 365,769 2,916
1970 380,921 -15,152
1971 408,176 -27,255
1972 435,936 -27,760
1973 466,291 -30,355
1974 483,893 -17,602
1975 541,925 -58,032
1976 628,970 -87,045
TQ 643,561 -14,591
1977 706,398 -62,837
1978 776,602 -70,204
1979 829,467 -52,865
1980 909,041 -79,574
1981 994,828 -85,787
1982 1,137,315 -142,487
1983 1,371,660 -234,345
1984 1,564,586 -192,926
1985 1,817,423 -252,837
1986 2,120,501 -303,078
1987 2,345,956 -225,455
1988 2,601,104 -255,148
1989 2,867,800 -266,696
1990 3,206,290 -338,490
1991 3,598,178 -391,888
1992 4,001,787 -403,609
1993 4,351,044 -349,257
1994 4,643,307 -292,263
1995 4,920,586 -277,279
1996 5,181,465 -260,879
1997 5,369,206 -187,741
1998 5,478,189 -108,983
1999 5,605,523 -127,334
2000 5,628,700 -23,177
2001 5,769,881 -141,181
2002 6,198,401 -428,520
2003 6,760,014 -561,613
2004 7,354,657 -594,643
2005 7,905,300 -550,643
2006 8,451,350 -546,050
2007 8,950,744 -499,394
2008 9,986,082 -1,035,338
2009 11,875,851 -1,889,769
2010 13,528,807 -1,652,956

Please note that 1969 is the last time we actually had a surplus.

Debt as a percentage of GDP:

1940 52.4
1941 50.4
1942 54.9
1943 79.1
1944 97.6
1945 117.5
1946 121.7
1947 110.3
1948 98.2
1949 93.1
1950 94.1
1951 79.7
1952 74.3
1953 71.4
1954 71.8
1955 69.3
1956 63.9
1957 60.4
1958 60.8
1959 58.6
1960 56.0
1961 55.2
1962 53.4
1963 51.8
1964 49.3
1965 46.9
1966 43.5
1967 42.0
1968 42.5
1969 38.6
1970 37.6
1971 37.8
1972 37.1
1973 35.6
1974 33.6
1975 34.7
1976 36.2
TQ 35.0
1977 35.8
1978 35.0
1979 33.2
1980 33.4
1981 32.5
1982 35.3
1983 39.9
1984 40.7
1985 43.8
1986 48.2
1987 50.4
1988 51.9
1989 53.1
1990 55.9
1991 60.7
1992 64.1
1993 66.1
1994 66.6
1995 67.0
1996 67.1
1997 65.4
1998 63.2
1999 60.9
2000 57.3
2001 56.4
2002 58.8
2003 61.6
2004 62.9
2005 63.5
2006 63.9
2007 64.4
2008 69.4
2009 84.2
2010 93.2

[ElNono]

Thanks for the PDF and the numbers. I hope you understand now that tax cuts in every instance reduced receipts, which exactly opposite of what the OP claims, and validates what Bruce Bartlett was saying in the article WH posted. :tu

[Wild Cobra]

Thanks for the PDF and the numbers. I hope you understand now that tax cuts in every instance reduced receipts, which exactly opposite of what the OP claims, and validates what Bruce Bartlett was saying in the article WH posted. :tu
I disagree. You act as if it's the only factor.

[ElNono]

Well, we asked you to elaborate on what you've learned from that other chart you posted, and so far you haven't.

[ElNono]

I disagree. You act as if it's the only factor.

The premise as presented, including the misleading chart in the OP, is pretty light on details. As scott pointed out, when you leave out the context, you're just talking to yourself.

[admiralsnackbar]

Seemed germane. Apologies for formatting.
****************************

The Stealth Tax Reduction for the Wealthy

By Robert Frank

The renewed fight between Democrats and Republicans over taxing the wealthy makes for good political theater. But behind the stage, Congress has already lowered some taxes for the wealthy through a series of stealth loopholes.
Consider the latest, documented by Karen Hube at Fiscal Times (http://www.washingtonpost.com/business/the-tax-law-that-could-make-your-kids-super-rich/2011/06/20/AG2DoskH_story.html). According to Hube, a wealthy family can pass along a fortune of as much as $400 million to an heir without paying any taxes.
This is made possible by two recent changes in the U.S. Tax Code: one lifted a $100,000 income cap on people who convert a 401k to a Roth IRA, and the other raises the generation-skipping transfer tax (or GST) exemption to $5 million from the $1 million originally scheduled for this year.
On their own, the changes are modest. When combined, they can create huge windfalls. IRA expert Ed Slott calls it the “government’s going-out-of-business sale.”
Hube explains:
“A wealthy individual converts a large 401(k) account to a Roth IRA and names a grandchild as the beneficiary. The grandchild, at age 1, inherits the Roth, whose assets have grown to $5 million. Because of the new $5 million GST, the Roth assets would not be subject to estate tax or generation-skipping transfer tax.”
Slott says that over the child’s lifetime, assuming an annual return of 8% and a life expectancy of about 82 years, the total income could exceed $400 million, “completely free of estate, gift, income and capital gains taxes.”
Many might say this is fair and just, since the wealthy have saved and earned their own money and deploy it more efficiently than Uncle Sam does. Others might say the loophole is proof Congress is mortgaging the nation’s future to benefit the rich.
Whatever the argument, the truly wealthy (and their tax attorneys) probably are paying more attention to the Roth-GST combo than the top income-tax rate.
Do you think the new loophole should be closed or allowed to remain?


http://blogs.wsj.com/wealth/2011/06/28/the-stealth-tax-reduction-for-the-wealthy/?fb_ref=article_top&fb_source=home_multiline

[coyotes_geek]

It gets better. As of 2010, there are no longer any income caps on roth ira conversions. Doesn't matter how rich you are, you can now convert your traditional IRA to a Roth IRA and pay taxes using Bush-era tax rates and a deflated portfolio valuation due to the recession. And that will be all the taxes you'll ever have to pay on that account ever again.

[RandomGuy]

I grabbed that chart just to start the thread with. This one illustrates what I have learned some years ago:

http://reason.com/assets/mc/ngillespie/2010_11/taxratevsgdpjpeg.jpg

The Remarkably Stable Amount of Federal Revenue as a Percentage of GDP (http://reason.com/blog/2010/11/29/the-remarkably-stable-amount-o)

Um, that is pretty much the same debunked idea as the OP.

Do you always "learn" things that are untrue or was it just this once?

[RandomGuy]

'It's the demand side, stupid'

Bob Moon: President Obama had a message for Congress today as he faced reporters at the White House. He challenged Republicans to go along with eliminating certain tax breaks for the super-wealthy.

Barack Obama: The revenue we're talking about isn't coming out of the pockets of middle-class families that are struggling. It's coming out of folks who are doing extraordinarily well, and are enjoying the lowest tax rates since before I was born.

At the same time, the president urged lawmakers to extend his tax cuts for middle-income Americans. He pressed Congress to raise the debt ceiling. And he says there's an important way lawmakers can help put more Americans back to work.

Obama: Right now, Congress can advance a set of trade agreements that would allow American businesses to sell more of their goods and services to countries in Asia and South America.

That may be one way to get more people back on the payrolls. Commentator Robert Reich has another idea: Work on increasing demand for goods and services here at home.


--------------------------------------------------------------------------------

Robert Reich: What to do about raging unemployment? Many Republicans and a few Democrats are peddling supply-side solutions. Cut corporate taxes. Reduce the cost of capital. Cut the employer share of payroll taxes.

This is nonsense. The problem is not on the supply side.

Companies don't need financial incentives to hire. They're sitting on $1.9 trillion of cash. They don't even know what to do with it all. If they wanted to use this cash to hire additional workers, they could. Instead, they're buying back their own stock and buying other companies.

Nor is the cost of capital an issue. Capital is cheap. Companies can get bargain-basement interest rates on new loans.

Nor does it make any sense to lower the employer share of payroll taxes. This won't create jobs. Payroll taxes are not deterring companies from adding employees.

Let's get real: The problem is on the demand side. It doesn't make economic sense for businesses to hire more workers unless businesses have more customers. And they don't.

These days consumers are reluctant to buy. That's because their real wages are falling, their home values are plummeting, they're still under a huge debt load, and they're worried about keeping their jobs.

Supply-side solutions have nothing to do with any of this. They're like pushing wet noodles. The economy needs a boost on the demand side.

For 30 years now we've been hearing from "supply-side" economists say that if we reduce tax rates on the rich and on corporations -- and keep the cost of capital low -- we'll get more jobs and growth. And the benefits will trickle down to everyone else.

Well, we've tried the theory out, and little or nothing has trickled down. Tax revenues are now 15 percent of the national economy. That's the lowest in 60 years. And capital is cheaper than ever. But the economy is going nowhere.

Can I be blunt? It's the demand side, stupid.

Article link at NPR (http://marketplace.publicradio.org/display/web/2011/06/29/pm-its-the-demand-side-stupid-commentary/)

It is pretty obvious we need to start taxing capital gains at a higher rate, and raising marginal tax rates on the upper end.

Unless of course, you don't really understand how taxes or economics work, like the OP. In which case you will probably simply stick your fingers in your ears and go "la la la..." (I am assuming the article in the OP didn't understand the graph, as opposed to understood it, but deliberately lied by omission, which is a distinct possiblity)

[admiralsnackbar]

It gets better. As of 2010, there are no longer any income caps on roth ira conversions. Doesn't matter how rich you are, you can now convert your traditional IRA to a Roth IRA and pay taxes using Bush-era tax rates and a deflated portfolio valuation due to the recession. And that will be all the taxes you'll ever have to pay on that account ever again.
Gotdamn. That's a great deal. I wonder if it's any fun if you're already uber wealthy, though.

Kinda like somebody slipping your family the financial version of the "god" code in Doom, innit?

[boutons_deux]

"start taxing capital gains at a higher rate , and raising marginal tax rates on the upper end.

tax fund mgrs' fee/services income as earned income and not as capital gains.

add a financial speculation tax to commodities, stock trades.

uncap SS with no upper limit.

etc, etc.

[Wild Cobra]

Well, we asked you to elaborate on what you've learned from that other chart you posted, and so far you haven't.
As pointed out, that chart isn't very good.

Did you click on the chart and read the text though?

[Winehole23]

So then, it doesn't illustrate something you learned years ago. Thanks for clarifying.

[RandomGuy]

As pointed out, that chart isn't very good.

Did you click on the chart and read the text though?

I read the text of both links you posted.

As noted, the article was debunked a while back as being either ignorant or blatantly dishonest.

Just so we are clear here, do you genuinely believe this, or are you just playing devil's advocate?

[Winehole23]

Read it. What's your take, WC?

[RandomGuy]

The short explanation as to why the graphs posted are not telling the entire rate, is because they are essentially cherry-picking data.

What is missing:

% of people subject to upper marginal rate
% of all income subject to upper marginal rate

If one lowers taxes on the upper marginal rate, then makes it up down the scale somehow or through other methods, you can easily get a disconnect from total revenue. Given that the upper rate has gone down, but the total revenue has remained constant, this is the most likely explanation.

We need to raise both the upper marginal rate, as well as the capital gains taxes, and stop the give-aways to corporations and the super rich.

As has been pointed out already, we have done both, and employment has done fuckall. It is time to stop pushing on the wet noodle of supply and take the demand rope again.

Supply-side economics has been tried, and has not worked.

[ElNono]

As pointed out, that chart isn't very good.

Did you click on the chart and read the text though?

You said you learned something. What is it exactly that you learned?
That was the question.

[Wild Cobra]

You said you learned something. What is it exactly that you learned?
That was the question.
That average revenue is 18.3% of GDP.

Increasing taxes decrease GDP, therefore revenues decline.

Didn't I point that out?

[ElNono]

Increasing taxes decrease GDP, therefore revenues decline.

Didn't I point that out?

I don't think you did. I also don't think the numbers you posted backup that contention either.

[ElNono]

Under your formula, there were no tax increases from 1977 to 2009 (where the GDP grew)... we all know that's absurdly wrong.

[Wild Cobra]

Under your formula, there were no tax increases from 1977 to 2009 (where the GDP grew)... we all know that's absurdly wrong.
Huh?

http://i181.photobucket.com/albums/x262/Wild_Cobra/Politics/1934to2010marginal.jpg

[ElNono]

Huh?


Increasing taxes decrease GDP

Huh?

Not a single chart you posted includes a graph of GDP. Based on the numbers you posted, the GDP increased from 1977 all the way to 2009. Only in 2010 the GDP decreased to the year before. AFAIK, there were no tax increases in 2009.

[ElNono]

While you're making these charts, could you also include the numbers of tax payers? It's not like there wasn't an increase in population and an extension of the retirement age throughout those years. Obviously, receipt numbers are also dependent on the number of persons paying taxes.

[ElNono]

Oh, I also assume that tax credits are not included in those numbers?

[Wild Cobra]

Huh?

Not a single chart you posted includes a graph of GDP. Based on the numbers you posted, the GDP increased from 1977 all the way to 2009. Only in 2010 the GDP decreased to the year before. AFAIK, there were no tax increases in 2009.
OK...

You should learn by now to know my intent... Even when I say it wrong... Listen to what I mean, not what I say.

Sorry for the confusion.

Increasing taxes decrease the economy relative to the growth it would have had. It grows less. If things were static without inflation, would decrease GDP.

[ElNono]

Sorry for the confusion.
Increasing taxes decrease the economy relative to the growth it would have had. It grows less. If things were static without inflation, would decrease GDP.

But GDP growth isn't solely controlled by taxes. That conclusion is actually worse than the data cherry picking that the article in the OP did.

That's really what you learned?

[Winehole23]

:lol

[Wild Cobra]

Oh, I also assume that tax credits are not included in those numbers?
The latest graph I posted is just the historical revenue percentages graphed with the historical marginal rates.

Notice that there is little change in the percentage of individual income tax revenue from GDP, regardless of marginal rate, but there is a general higher percentage with a lower tax rate.

Ooops...

I marked those bad.

Individual tax as % of GDP should be Individual tax revenue as % of GDP. Same with corporate and total.

[ElNono]

That's a pretty inane conclusion. Anybody worth their salt will tell you that labor, capital, technology at any given time are all factors that go directly at GDP growth.

[RandomGuy]

Increasing taxes decrease GDP, therefore revenues decline.


This made my eyes bleed.

Stop saying things like this, until you actually complete a macroeconomics course and have a working familiarity with how GDP is measured.

Increasing taxes does not decrease GDP.

[LnGrrrR]

Increasing taxes does not decrease GDP.

Pfft. Of course it does. That's accepted, a starting point, a maxim.

You can't trust anyone/thing that says otherwise. They're probably lying.

[RandomGuy]

To be fair:

Increasing taxes simply imposes a higher cost on whatever activity/good you tax.

This tends to discourage whatever you tax, by shifting the supply curve.

Not precisely "decreasing GDP".

One thing that will directly cause GDP to decline is cutting government spending.

Suck on that for a while.

[RandomGuy]

Pfft. Of course it does. That's accepted, a starting point, a maxim.

You can't trust anyone/thing that says otherwise. They're probably lying.

Or trying to frame something withouy the correct context.

[LnGrrrR]

To be fair:

Increasing taxes simply imposes a higher cost on whatever activity/good you tax.

This tends to discourage whatever you tax, by shifting the supply curve.

Not precisely "decreasing GDP".

One thing that will directly cause GDP to decline is cutting government spending.

Suck on that for a while.

You lie!

Everyone knows that the lower the taxes, the more the GDP. Not only that, but the lower the tax, the more money gov't actually rakes in!

Now, it obviously can't be 0 percent. So the correct answer on how much to tax is .0000000000000000000000000000000000000000000000001 percent. Specifically, a dollar per person, per year.

If you don't believe me, GFY