Higher Taxes, Lower Revenue

[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 su ion 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'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.

[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

[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

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; $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

[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 :

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.

[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.

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, do ented by Karen Hube at Fiscal Times. 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/...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:



The Remarkably Stable Amount of Federal Revenue as a Percentage of GDP

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

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 all. 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?