Deficit spending & Taxes.

[eliza61]

Well, you say you're economically challenged but you're asking for good and basic questions that no one seems to bother asking anymore.

And currently our federal debt is 10 Trillion......and growing by the day. Our entitlement programs are 53 Trillion in the hole when you factor in promises we've made with respect to SS, Medicare and the Medicare Prescription drug program.

We have tax rates now at historic lows. And we're deeper in debt than we've ever been and about to enter a serious recession if we're not in one already.

We can't continue down this path thinking that we can actually *cut* taxes further.....and hope to hell that it trickles down to the rest of the population. Not only will taxes have to go up, but spending needs to be cut drastically.

Thanks DVCgirl,
haven't heard from you in a while. This is what I thought, but I thought it was because I was looking at it from my "kitchen table" economics. It's funny that last week every one was panicking over the stock market I guess for very good reasons but it doesn't seem we have learned any thing and I hate to think we are doomed to make the same mistakes. For example, we passed the bailout plan but it was loaded with extra "junk", we're already in debt and now congress (both sides) are suggesting another stimulus check. I mean the 1st one didn't go over so well, why the heck are we giving out another one?

 

[corndog]

The rich are paying a higher share of taxes because of the dramatic increases in income inequality. They're also controlling a historically high percentage of our country's wealth. In terms of effective tax rate, however, the current rate for the top bracket is at a historic low.

OK, let's talk about this. It seems to me that people are saying that 2000 was the Holy Grail of the economy. Let's compare 2000 to the most recent year for which data is available - 2005, which is well after the Bush tax cuts were in full effect.

In 2000, the top 1% earned 20.81% of all the income and paid 37.42% of all the income taxes.
In 2005, the top 1% earned 21.20% of all the income and paid 39.38% of all the income taxes.

In 2000, the top 10% earned 46.01% of all the income and paid 67.33% of all the income taxes.
In 2005, the top 10% earned 46.44% of all the income and paid 70.30% of all the income taxes.

Again, the facts do not comport with your claims. Yes, there were small upticks in total earnings, but "the rich's" share of taxes paid increased by 4-6x as much as their share of total earnings increased.

I understand your disbelief, as the facts are never reported. But the numbers are what they are, and are not open to debate.

 

[Biscuitsmom31]

If tax cuts raise revenue how come Reagan and Bush have run up the deficit more than any other presidents in history?

 

[bsnyder]

To the OP, our national debt is actually in excess of $10 trillion. When we're having economic trouble it is probably best to focus on dealing with the trouble and not worry so much about the debt--as a percentage of GDP it is somewhat lower than it has been in other times in our history.

Very good! I see you got the Democrats' new talking point....

http://www.disboards.com/showthread.php?t=1978343&page=1&highlight=

Expect to hear a lot more of this argument, folks. Especially in the mainstream media. And especially the GDP % numbers, something that they mysteriously haven't pointed out much, in all the deficit hysteria of the last few years.

 

[corndog]

If tax cuts raise revenue how come Reagan and Bush have run up the deficit more than any other presidents in history?

Well, if A - B = C, where A is tax revenue, B is spending and C is the deficit or surplus, and C continues to get more negative despite increases in A, what must B be doing?

 

[Biscuitsmom31]

Well, if A - B = C, where A is tax revenue, B is spending and C is the deficit or surplus, and C continues to get more negative despite increases in A, what must B be doing?

Clearly the intake must match the expenditures. I think the way to increase the intake is to increase taxes. I also think we need to decrease the expenditures. We have to get out of the hole somehow and I personally think cutting taxes = less revenue = more debt. Especially when we have wars going on that we have to fund, regardless of how much spending we cut.

 

[joviroxx]

Clearly the intake must match the expenditures. I think the way to increase the intake is to increase taxes. I also think we need to decrease the expenditures. We have to get out of the hole somehow and I personally think cutting taxes = less revenue = more debt. Especially when we have wars going on that we have to fund, regardless of how much spending we cut.

Ah, but here's the kicker, history has shown that when you decrease taxes, the actual tax revenue collected by the government increases.

 

[corndog]

. . . I personally think cutting taxes = less revenue = more debt.

You can think that all you want, but it's demonstrably false.

 

[AndyLL]

The numbers prove otherwise.

No they don't. There is always a short term increase in revenue and then a sharp dropoff.

Using your theory a tax rate of 0 should bring in even more revenue.

 

[bsnyder]

No they don't. There is always a short term increase in revenue and then a sharp dropoff.

Using your theory a tax rate of 0 should bring in even more revenue.

Why the sharp drop off? What causes that?

And under your "theory" what would a tax rate of 100% bring in revenues?

 

[corndog]

No they don't. There is always a short term increase in revenue and then a sharp dropoff.

I'm sorry, but you are not entitled to make up your own facts. The numbers are what they are, and are incontrovertible. What you claim has never happened in our history. Period.

Using your theory a tax rate of 0 should bring in even more revenue.

I have said no such thing. You are likewise not entitled to your own version of my statements.

 

[corndog]

Why does everyone run away
When the facts come out to play?

 

[eliza61]

Why does everyone run away
When the facts come out to play?

I'm still here (Op here still trying to figure out how we got into this financial titanic)

I guess the problem I'm having is that this seems to be unusual times because the old "lower taxes"= more revenue doesn't seem to be working in my neck of the woods.
Big companies got tax breaks and this time it didn't equate to more jobs or more disposable income. So I guess my facts are different than the numbers.

So if the tax revenue has increased I going to make the assumption that government is blowing my money, big cats are pocketing the money or some one is stealing it.

and we have a national debt that at some point has to be dealt with. So I guess my neck question is if the tax breaks that corporations got in 2003 were suppose to do the job, how in the heck did we end up where we are?

please nobody give me the "we are better off than we were in the depression, 60's or 70's" song. While I'm sorry that these people suffered it in no way makes me feel better about these hard times now.

 

[Biscuitsmom31]

You can think that all you want, but it's demonstrably false.

I believe the massive debt from the Reagan and Bush years contradicts that.

 

[Biscuitsmom31]

Why does everyone run away
When the facts come out to play?

I have to at least do some work!

 

[Cool-Beans]

Which candidate will continue to spend money like there will never be a day that it comes back to bite us in the butt and will tax and tax and tax?

The one that gets elected. Anyone who says differently is stupid or lying.

 

[Chicago526]

Which candidate will continue to spend money like there will never be a day that it comes back to bite us in the butt and will tax and tax and tax?

The one that gets elected. Anyone who says differently is stupid or lying.

Exactly. I had a conversation with my father the other day, a life long Republican and McCain/Palin voter (he voted already). He said, "Obama is going to spend us into the poor house, how can you support him?"

I said, "because if the last 8 years has shown me anything, it's that BOTH parties are going to spend us into the poor house. The difference is, that the Dems at least spend the money on things that I'm for."

If we're going to be broke (as a nation) no matter what, I'd rather spend the money on health care then a war in Iraq. But that's just me.

I like Obama, and I'm voting for him. I'm not under any illusions though. As much as he wants it, he may not be able to do his tax cuts, his heath care plan, or a lot of the other things he wants to do. The state of the economy may (actually, it probably will) prohibit that.

I wish he'd come out and say "You know those tax cuts I promised earlier in the campaign? We can't do those right now. I won't lower your taxes, but I won't raise them either. I'm going to leave things alone for the first year or two that I'm in office, cut spending, add no new programs, and see how things go. If things turn around, then we can look at tax cuts and/or new programs and new spending." I think he'd win in a land slide if he did that.

 

[corndog]

I believe the massive debt from the Reagan and Bush years contradicts that.

Again, you can believe that all you want, but it remains demonstrably false.

I'm not saying there is not debt. Obviously there is. The debt is because increases in spending outpaced the increases in revenue. Tax cuts did not result in lower revenue and the data is available to prove it.

 

[AndyLL]

Why does everyone run away
When the facts come out to play?

You have given 0 facts.

I'm sorry, but you are not entitled to make up your own facts. The numbers are what they are, and are incontrovertible. What you claim has never happened in our history. Period.

Real Revenues Have Declined 6.3 Percent Since 2000

Revenues as a Percent of GDP
2004 Levell iis Lowestt Siince 1959


“It is very rare and very few economists
believe that you can cut taxes and you
will get the same amount of revenues.”

– Former Federal Reserve Chairman
Alan Greenspan
Testimony before House Budget Committee
September 8, 2004

“I don’t think that, as a general rule,
that tax cuts pay for themselves.”

–Federal Reserve Chairman Ben Bernanke
Testimony before Joint Economic Committee
April 27, 2006


“As a general matter, most tax cuts do not pay for themselves.”

─ OMB Director Nominee Rob Portman
Written Response to Questions Submitted
Prior to Senate Budget Committee
Nomination Hearing
May 10, 2006

“[There is] no credible evidence that tax
revenues ... rise in the face of lower tax rates.”
“[An economist claiming tax cuts pay for
themselves is like a] snake oil salesman who
is trying to sell a miracle cure.”

– Former Chairman of President’s Council of
Economic Advisers N. Gregory Mankiw
Introductory college economics textbook,
“Principles of Economics,” 1998

​

http://www.senate.gov/~budget/democratic/charts/2006
/packet_DynamicScoring062006.pdf

Once you get past the GOP blogs it's trivial to find numbers to show that inflation adjusted and GDP adjusted revenues eventually are lower. (the GDP grows with or without tax cuts... you have to remove the typical growth)

I have said no such thing. You are likewise not entitled to your own version of my statements.

You claim the past tax cuts created 'double digit' revenue increases. I would assume you also claim more tax cuts would create even more revenue.

I just trying to find out if you believe there is a point when that is not true.

You keep stating some facts you claim are absolute. Why don't you put some numbers where your mouth is:

1. Why don't you go out and get some government revenue numbers.
2. Adjust them for normal GDP growth that would've occured anyway.
3. Adjust for inflation

Make sure you are only using income tax revenue generation. Make sure FCIA tax revenues are not included... those go up naturally.

I already did it for you once earlier this year. ( I beleave it was on the Budget Board) . You left that discussion quickly.

I'll leave you with a quote from the Reagan Admistration after the 1st true application of supply side economics:

David Stockman, Ronald Reagan's budget director, admitted that the 1981 tax cut was a Trojan horse:

“ The hard part of the supply-side tax cut is dropping the top rate from 70 to 50 percent—the rest of it is a secondary matter. The original argument was that the top bracket was too high, and that's having the most devastating effect on the economy. Then, the general argument was that, in order to make this palatable as a political matter, you had to bring down all the brackets. But, I mean, Kemp-Roth was always a Trojan horse to bring down the top rate.[39]
​

 

[corndog]

You have given 0 facts.

You have 0 credibility. Please read the thread before commenting.