The new CBO data show that changes in law enacted since January 2001 increased the deficit by $539 billion in 2005. In the absence of such legislation, the nation would have a surplus this year [2005]. Tax cuts account for almost half — 48 percent — of this $539 billion in increased costs.
There is no evidence that taxes lower than confiscatory rates raise more revenue.Just to point out.. many people don't understand the Laffer Curve...
Less taxes does not mean more revenue in the Laffer curve. Its a CURVE..
At zero taxes.. you have no revenue.. and your revenue goes UP as YOU TAX MORE.. so in half the curve.. the MORE you tax, the more revenue you make.
At a "sweet spot" taxes reach a level that maximizes revenue...
After that spot.. as taxes go up.. revenue goes down as folks avoid taxes, or slow down business etc.. until you reach a bottom where Taxes are so high (100%) that there is no incentive for production and thus no revenue.
The theory that lower taxes yields higher revenue has been discredited by history.
These two graphs illustrate the problem with the Bush tax-cuts. Even though GDP rose federal revenue dropped:
It should be obvious to anyone. After each Bush tax-cut, even though GDP rose, revenue dropped. However, some will deny reality because it's more soothing to deny the facts than challenge the validity of their ideology.
"Lowering taxes increases revenues:" There is no empirical evidence that the claim is true and plenty of evidence that the claim is false.
Not even Mitch McConnell makes that claim. McConnell said, there is "No evidence whatsoever that the Bush tax cuts actually diminished revenue." He wasn't saying it increased it; he said it didn't diminish it. But even that's wrong.
When the tax-cuts were passed, the CBO estimated that the 2001 tax-cut:
"would decrease governmental receipts by $70 billion in 2001, by $512 billion over the 2001-2006 period, and by $1.26 trillion over the 2001-2011 period";
AND:
"The Joint Committee on Taxation (JCT) and CBO estimate that H.R. 2 [the Jobs and Growth Tax Relief Reconciliation Act of 2003] would increase budget deficits by $60.8 billion in 2003, by $342.9 billion over the 2003-2008 period, and by $349.7 billion over the 2003-2013 period. "
The Congressional Budget Office said:
How about the Committee for a Responsible Federal Budget? Their budget calculator shows that the tax cuts will cost $3.28 trillion between 2011 and 2018.
How about George W. Bush's CEA chair, Greg Mankiw, who used the term "charlatans and cranks" for people who believed that "broad-based income tax cuts would have such large supply-side effects that the tax cuts would raise tax revenue." He continued: "I did not find such a claim credible, based on the available evidence. I never have, and I still don't."
The bottom-line is that the Bush tax-cuts cut revenue: In 2000, federal tax revenues were $2,025.46 billion, nominal GDP was $9,951.5 billion. In 2003, these amounts were $1,782.53 billion and $11,142.1 billion. In other words, GDP rose 12% and federal revenues fell 12%.
Federal revenues eventually rose, to take out the 2000 peak in 2005 (2007 in real terms,) but this doesn't mean much. Revenues eventually catch up due to GDP growth and population growth regardless of policy. The economy grows 4-6% most years, unadjusted for inflation, so naturally the general trend of taxes is to rise about 4-6% each year. Being unable to return to a previous peak for five years, despite this built in trend strongly suggests tax cuts reduced revenue, ceteris parabus.
The theory that lower taxes yields higher revenue has been discredited by history.
These two graphs illustrate the problem with the Bush tax-cuts. Even though GDP rose federal revenue dropped:
It should be obvious to anyone. After each Bush tax-cut, even though GDP rose, revenue dropped. However, some will deny reality because it's more soothing to deny the facts than challenge the validity of their ideology.
"Lowering taxes increases revenues:" There is no empirical evidence that the claim is true and plenty of evidence that the claim is false.
Not even Mitch McConnell makes that claim. McConnell said, there is "No evidence whatsoever that the Bush tax cuts actually diminished revenue." He wasn't saying it increased it; he said it didn't diminish it. But even that's wrong.
When the tax-cuts were passed, the CBO estimated that the 2001 tax-cut:
"would decrease governmental receipts by $70 billion in 2001, by $512 billion over the 2001-2006 period, and by $1.26 trillion over the 2001-2011 period";
AND:
"The Joint Committee on Taxation (JCT) and CBO estimate that H.R. 2 [the Jobs and Growth Tax Relief Reconciliation Act of 2003] would increase budget deficits by $60.8 billion in 2003, by $342.9 billion over the 2003-2008 period, and by $349.7 billion over the 2003-2013 period. "
The Congressional Budget Office said:
How about the Committee for a Responsible Federal Budget? Their budget calculator shows that the tax cuts will cost $3.28 trillion between 2011 and 2018.
How about George W. Bush's CEA chair, Greg Mankiw, who used the term "charlatans and cranks" for people who believed that "broad-based income tax cuts would have such large supply-side effects that the tax cuts would raise tax revenue." He continued: "I did not find such a claim credible, based on the available evidence. I never have, and I still don't."
The bottom-line is that the Bush tax-cuts cut revenue: In 2000, federal tax revenues were $2,025.46 billion, nominal GDP was $9,951.5 billion. In 2003, these amounts were $1,782.53 billion and $11,142.1 billion. In other words, GDP rose 12% and federal revenues fell 12%.
Federal revenues eventually rose, to take out the 2000 peak in 2005 (2007 in real terms,) but this doesn't mean much. Revenues eventually catch up due to GDP growth and population growth regardless of policy. The economy grows 4-6% most years, unadjusted for inflation, so naturally the general trend of taxes is to rise about 4-6% each year. Being unable to return to a previous peak for five years, despite this built in trend strongly suggests tax cuts reduced revenue, ceteris parabus.
No, that's another example of mirror thinking. Conservatives want smaller government, per se, so they think liberals must want bigger government for the sake of bigger government. No, liberals want government to do things, such as provide a safety net and affordable health care. The size of government isn't a goal of liberals.From an economic standpoint everything he says looks correct.
From a political standpoint He may be off on what left wingers want.
Yes they want bigger government, but they also seem to want to punish success.
Success creates differences in outcome, an in the liberal mind,
that is unfair, and should be punished.
There is no evidence that taxes lower than confiscatory rates raise more revenue.
This is a good read: A review of the economic research on the effects of raising ordinary income tax rates
Actually you're right that Liberals don't agree with the "Laffer Curve"....they do agree there is a relationship between very high tax rates and tax revenue and very low tax rates and tax revenue. The idea that it looks like a curve Laffer drew on a cocktail napkin based on no research is just ridiculous. In fact the Romer study actually found that you could actually tax the wealthy a much higher rates than 33% or even the 35% before you start seeing declines in tax revenue.
That's an example of reductio ad absurdum, carrying an argument to the absurd.Tell me.. what do you think GDP would be if we taxed all revenue at 100%? Do you think that countries would flee America to go to countries with lower taxes if we taxed revenue 100%.
If GDP dropped.. would not revenue drop?
Please answer that.
Of course NONE of this left wing gibberish even addresses the OP. The OP merely theorizes there is some point at which an increase in tax rates does not equal an increase in revenue.And that there is some point at which a lower tax rate would actually resultThat's an example of reductio ad absurdum, carrying an argument to the absurd.
If lowering taxes yields more revenue, what would revenue be if we lowered tax-rates to zero?
.)
The theory that lower taxes yields higher revenue has been discredited by history.
These two graphs illustrate the problem with the Bush tax-cuts. Even though GDP rose federal revenue dropped:
It should be obvious to anyone. After each Bush tax-cut, even though GDP rose, revenue dropped. However, some will deny reality because it's more soothing to deny the facts than challenge the validity of their ideology.
"Lowering taxes increases revenues:" There is no empirical evidence that the claim is true and plenty of evidence that the claim is false.
Not even Mitch McConnell makes that claim. McConnell said, there is "No evidence whatsoever that the Bush tax cuts actually diminished revenue." He wasn't saying it increased it; he said it didn't diminish it. But even that's wrong.
When the tax-cuts were passed, the CBO estimated that the 2001 tax-cut:
"would decrease governmental receipts by $70 billion in 2001, by $512 billion over the 2001-2006 period, and by $1.26 trillion over the 2001-2011 period";
AND:
"The Joint Committee on Taxation (JCT) and CBO estimate that H.R. 2 [the Jobs and Growth Tax Relief Reconciliation Act of 2003] would increase budget deficits by $60.8 billion in 2003, by $342.9 billion over the 2003-2008 period, and by $349.7 billion over the 2003-2013 period. "
The Congressional Budget Office said:
How about the Committee for a Responsible Federal Budget? Their budget calculator shows that the tax cuts will cost $3.28 trillion between 2011 and 2018.
How about George W. Bush's CEA chair, Greg Mankiw, who used the term "charlatans and cranks" for people who believed that "broad-based income tax cuts would have such large supply-side effects that the tax cuts would raise tax revenue." He continued: "I did not find such a claim credible, based on the available evidence. I never have, and I still don't."
The bottom-line is that the Bush tax-cuts cut revenue: In 2000, federal tax revenues were $2,025.46 billion, nominal GDP was $9,951.5 billion. In 2003, these amounts were $1,782.53 billion and $11,142.1 billion. In other words, GDP rose 12% and federal revenues fell 12%.
Federal revenues eventually rose, to take out the 2000 peak in 2005 (2007 in real terms,) but this doesn't mean much. Revenues eventually catch up due to GDP growth and population growth regardless of policy. The economy grows 4-6% most years, unadjusted for inflation, so naturally the general trend of taxes is to rise about 4-6% each year. Being unable to return to a previous peak for five years, despite this built in trend strongly suggests tax cuts reduced revenue, ceteris parabus.
The Laffer curve doesn't say that lower taxes means more revenue. Watch the video. The Laffer curve suggests that there is a point of diminishing returns were tax rates become too high and taxes stifle economic growth. You are looking at this emotionally I believe.
That is true but it is not 33% -- or else there wouldn't have been a drop in revenue when Reagan and then Bush lowered taxes. According to the above research, the optimal marginal rate is between 73 and 80%.
This was real GDP growth during the 1950s to 2008. During that period there were lots of different top marginal rates -- from 90%, to 70%, to 50% to 39% to 35%. Notice where the periods of low taxation are? Neither do I.
That's an example of reductio ad absurdum, carrying an argument to the absurd.
If lowering taxes yields more revenue, what would revenue be if we lowered tax-rates to zero?
I think you should read what I posted earlier -- A review of the economic research on the effects of raising ordinary income tax rates: Higher revenue, unchanged growth, and uncertain but potentially large reductions in the growth of inequality | Economic Policy Institute
According to the research, the optimal top rate lies between 73%, (Diamond and Saez) and 80% (Romer and Romer.)
No.. its using logic..
The mantra that some in my party use that "lower taxes equals higher revenue".. is obviously not true because at some point.. taxes are so low that revenue is hurt..
BUT you don't seem to realize that YOUR liberal mantra of "higher taxes means higher revenue"... is also obviously not true because at some point.. taxes are so high that GDP is hurt and folks work to avoid those taxes...
Your economic research is absolutely flawed in that "optimal rates" being 73% and 80% or whatever is a bunch of BS.. because those are NOT effective tax rates. That's why rates are an absolutely a poor indicator of the effective of taxes. Because its not the effective tax rate.
Technically Romney is "supposed" to pay 39% right? Because he is so rich... but he pays close to 12%... because of the deductions and credits and being allowed to used capital gains.
You could raise Romneys earned income rate to 90% and you now how much his effective tax rate will change? Hardly noticeable.
That's a fact that liberals don't seem to get in your mantra... You rave about the high taxes of the 1940's and 1950's. Great.. and then go and look at the real indicator of just how much tax you are actually collecting which is measured by the percentage of GDP taxed. And you know what you find.. high marginal taxes and low marginal taxes and the actual rate of taxation per GDP stays right around 18.5%.
That is true but it is not 33% -- or else there wouldn't have been a drop in revenue when Reagan and then Bush lowered taxes. According to the above research, the optimal marginal rate is between 73 and 80%.
This was real GDP growth during the 1950s to 2008. During that period there were lots of different top marginal rates -- from 90%, to 70%, to 50% to 39% to 35%. Notice where the periods of low taxation are? Neither do I.
The "Laffer curve" is the "Intelligent Design" of economics. It's the old debunked "trickle-down" dressed as science.
How Mumbo-Jumbo Conquered the World: A Short History of Modern Delusions - Francis Wheen - Google Books
Raising tax rates above our current rates WOULD mean higher revenue up to a reasonable point if we didn't have so many ways to get around paying those taxes. Lower tax rates than our current rates are not ever going to raise revenues. There may be a caveat with "raising taxes will mean higher revenues", but its not a factually incorrect statement like "lower tax rates will increase revenues" is. "Raising effective tax rates within reasonable limits above our current rates by raising marginal tax rates, eliminating loop holes and deductions, and counting capital gains as income would increase revenue" is a factually true statement.
For the record, I only would want to do that so we can pay for the crap the previous generations have already bought and then hopefully balance our budget, cut taxes, and stop running up huge debt in the future.
That's another piece of Tom Foolery that I never understood. Assuming business owners have more money in most cases, than employees, please explain to me how a capitalist society can ever function with anything other than trickle down.
Well first things is that we have to stop talking about marginal rates and get down to effective tax rates and rates per GDP. THAT would be the way to really influence revenue...
"Lower tax rates will increase revenues" is not a factual incorrect statement because it depends on HOW you lower tax rates, on whom you lower them, and how high they are when you lower them. That's the problem with the liberal mantra.. that they are not willing to admit that some tax increases can hurt the economy and thus hurt revenue.
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