Bush tax cut analysis

[Torvald Von Mansee]

http://www.tax.com/taxcom/taxblog.ns...9?OpenDocument

[mookiemookie]

Any way you slice it, there's very little correlation between lowering tax rates and spurring economic growth. However you want to measure it - GDP, employment rate, personal income growth - none of them show a clear correlation. But yet this old canard is trotted out time and time again.

The Laffer Curve is bunk and always has been.

[Torvald Von Mansee]

Originally Posted by mookiemookie

Any way you slice it, there's very little correlation between lowering tax rates and spurring economic growth. However you want to measure it - GDP, employment rate, personal income growth - none of them show a clear correlation. But yet this old canard is trotted out time and time again.

The Laffer Curve is bunk and always has been.

You must feel very lonely living in Houston.

[mookiemookie]

Originally Posted by Torvald Von Mansee

You must feel very lonely living in Houston.

Like a Jew in Berlin circa 1942

[GoldenRivet]

Originally Posted by mookiemookie

Like a Jew in Berlin circa 1942

Something tells me you dont have it that bad

At any rate we have learned that deep tax cuts dont spur the economy.


we have also learned that taxing peoples asses off and bailing out big business fat cats with the money doesnt do it either.

so what is your solution guys?

[tater]

Current revenues as a % of GDP are just shy of 18% (17.7, 17.8, etc) with the Bush cuts in place.

This is an entirely normal value. The cuts did not decrease revenue as a % of GDP in any meaningful way. In addition, you cannot say what losses might have taken place with the previous rates, it's all speculation, and economic forecasting is frankly crap (coming from a physics background, I expect far smaller error bars before I'm willing to call something predictive).

The % has been in this range up and down since WW2 (between 16.something and 20% of GDP, and the vast majority of years in the 17% range).

Since revenues are essentially flat WRT marginal rates, why have them higher? Increase rates, and economy must contract just enough to offset the rise. Decrease rates, and it rises a little, keeping the revenue % nearly constant.

With any substantial changes in either direction, you'll see a spike for the year(s) of introduction, that's it. Then it stabilizes again.

What I'd prefer to see is a rationalization for spending 2/3 of our tax dollars (those of us that actually, you know, pay taxes enough to matter) on charity programs given mostly to people who don't need charity.

[Aramike]

Originally Posted by GoldenRivet

Something tells me you dont have it that bad

At any rate we have learned that deep tax cuts dont spur the economy.


we have also learned that taxing peoples asses off and bailing out big business fat cats with the money doesnt do it either.

so what is your solution guys?

Deep tax cuts DO spur the economy, but only on a long term basis when consumer confidence is high. People tend to spend when they have more money in their pockets, but they tend to hoard that money when they feel as though they may need it down the road in the near term.

As far as a solution goes, your guess is as good as mine. However, I would make damned sure not to raise tax rates right now. I also would try further incentivizing companies that do production-oriented business stateside. Finally, I would penalize companies that produce goods in other nation's whose markets are not as open to us as ours are to them.

[Ducimus]

Originally Posted by GoldenRivet

Something tells me you dont have it that bad

At any rate we have learned that deep tax cuts dont spur the economy.


we have also learned that taxing peoples asses off and bailing out big business fat cats with the money doesnt do it either.

so what is your solution guys?

Yesterday I watched some of this program on the history channel called "The crumbling of America." What it was about, was how our infrastructure is falling apart because it is not being maintained properly, or upgraded. This ranges from the sewer systems, highway and transportation, dams and levee's, the power grid, etc. Several examples the program cited were MAJOR eye openers. Particuarly the nations power grid, which, at current rate, according to estimates, will be on par with a 3rd world nation in 20 to 30 years. Imagine that, being equivlant to a 3rd world nation?

Upgrading, modernizing, replacing America's infra structure would be a HUGE source of jobs. Unfortunately, NOBODY wants to spend the money. What I think we should do, is shut down some of our overseas bases, like say in Korea. Also shut down any and all foreign aid, and the like that only bennfit other nations. Use that money, and start a work program to work on our infrastructure. I think this would go much farther to stimulate the economy then a lousy 200 dollar check that most people probably deposit in their saving because income and job prospects are dismal.

When the top marginal rate dropped in the early 80s (hugely dropped from a top rate ~70%), tax revenues initially fell by a percent or two, then came back up.

And the whole point is that the theory is crap because the losses during the initial fall are never made up by the eventual rise.
So all it does is increase the debt which has to be serviced.

[August]

Originally Posted by mookiemookie

Like a Jew in Berlin circa 1942

For you to say that shows you know absolutely nothing about the subject. Has the government made you wear one of those Obama symbols on your clothing? Have they confiscated everything you had of value and destroyed the rest?

Has anyone carted you and your family off to a death camp?

Frankly your post is an insult to the memory of the millions of people who were murdered or dispossessed by the nazis and it's not at all funny.

[GoldenRivet]

Originally Posted by August

Frankly your post is an insult to the memory of the millions of people who were murdered or dispossessed by the nazis and it's not at all funny.

agreed.

in another since he is practically calling Houstonians or even Texans as a whole "NAZIs"

[krashkart]

Originally Posted by mookiemookie

But yet this old canard is trotted out time and time again.

Is that to say that promises of tax breaks always seem to fly around when the elections are a'comin' up? I've begun to wonder why people even cheer that old line anymore.

[antikristuseke]

Thinking takes energy. It's fare easyer to just accept politicians claims at face value.

[krashkart]

I always seem to overlook that.

[SteamWake]

Originally Posted by mookiemookie

Any way you slice it, there's very little correlation between lowering tax rates and spurring economic growth.

Other than the fact it has worked everytime it has been tried.