Laffering all the Way to the Bank

[charrison]

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April 30, 2004, 8:29 a.m.
Laffering all the Way to the Bank
The fiscal 2003 midpoint shows higher tax revenues.

By Jerry Bowyer



Karl Popper said that the validity of a scientific theory is dependent upon its ability to accurately predict the future. If that is so, then the economic data so far this year have been very friendly to the theories of supply-side economics. In particular, the data have been kind to the supply-side?s most controversial provision: the effect of rate cuts on tax revenues.




A keynote aspect of supply-side thought has always been that, at times, cuts in marginal tax rates can actually lead to an overall increase in governmental tax revenues. BuzzCharts thinks this idea can be demonstrated best through an experiment: Would you bother going to work if the government took, say, 150 percent of your income? That is, would you still work if the government took every dollar you made plus fifty cents from your personal savings for each of those dollars? Of course you wouldn?t. In such a situation, you?d have no chance of creating any income, would not work, and the government?s tax receipts would be zero. Conversely, lowering tax rates can increase tax receipts ? but only to the point where rates get so low that receipts decrease again.

This concept was introduced in the 1970s by Art Laffer, when he famously sketched his Laffer Curve on a napkin. So, you might ask, where on that curve are we now? Are we above, or below, the most optimal point?

President Bush?s most recent tax cut proves that tax rates were, in fact, too high. This is demonstrated through the simple fact that the first half of fiscal year 2004 is showing higher tax revenues than the same period for fiscal year 2003. Between October 2003 and March 2004 (the first half of FY 2004), tax receipts were at more than $850 billion, which is $25.3 billion higher than receipts for the year-ago period.

 

[dmcowen674]

As all the State and Local Govt's adjust and proceed to step up and take over in the pillaging, ravaging the lower class with so much Taxes and Fees that only the rich can survive.

Clap Clap clap, there's your Laffering to the bank. Way to Go Charrison (Thumbs Up Icon)

 

[Ldir]

Originally posted by: charrison
President Bush?s most recent tax cut proves that tax rates were, in fact, too high. This is demonstrated through the simple fact that the first half of fiscal year 2004 is showing higher tax revenues than the same period for fiscal year 2003. Between October 2003 and March 2004 (the first half of FY 2004), tax receipts were at more than $850 billion, which is $25.3 billion higher than receipts for the year-ago period.

It only proves you do not know much about tax revenue. It has risen steadily since the early 1900's. It rises after tax increases. It rises after tax cuts. Income tax revenue increases naturally because of economic growth and inflation. Your 2.98% rise is smaller than inflation plus economic growth in the last year. Laffer is still a fraud.


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Bush Apologists of America (BAA): pulling the wool over America's eyes since 1980

 

[SagaLore]

Originally posted by: dmcowen674 ravaging the lower class with so much Taxes and Fees that only the rich can survive.

Anybody I know in the "lower class" already don't pay any taxes, and I'm in the middle class and my taxes certainly didn't go up. However, the company I work for has expanded it's territory and staff, commerical buildings are popping up all over, once dead buildings are now being occupied by business, and I know some people that got some hefty tax refunds.

You dems must live in some crap holes if you can honestly tell me the tax cuts have hurt anybody.

 

[tnitsuj]

How can you equate these tax revenue increases to the tax cuts? That doesn't seemed to be backed up by anything.

 

[Jhhnn]

Amazing false attribution of cause and effect.

Lemme see, applying the same logic to my personal finances, I should take a cut in pay, borrow as much as I can on my credit cards, call the "cash back" increased revenue.

Any fool can increase tax revenues $25B by throwing $500B of deficit spending into the economy- it's a no-brainer.

 

[Ldir]

Originally posted by: SagaLore

Originally posted by: dmcowen674 ravaging the lower class with so much Taxes and Fees that only the rich can survive.

Anybody I know in the "lower class" already don't pay any taxes, and I'm in the middle class and my taxes certainly didn't go up. However, the company I work for has expanded it's territory and staff, commerical buildings are popping up all over, once dead buildings are now being occupied by business, and I know some people that got some hefty tax refunds.

You dems must live in some crap holes if you can honestly tell me the tax cuts have hurt anybody.

They hurt your children. Your children will pay for your tax cut.

 

[dmcowen674]

Originally posted by: SagaLore

Originally posted by: dmcowen674 ravaging the lower class with so much Taxes and Fees that only the rich can survive.

Anybody I know in the "lower class" already don't pay any taxes, and I'm in the middle class and my taxes certainly didn't go up. However, the company I work for has expanded it's territory and staff, commerical buildings are popping up all over, once dead buildings are now being occupied by business, and I know some people that got some hefty tax refunds.

You dems must live in some crap holes if you can honestly tell me the tax cuts have hurt anybody.

Oh really? I can show you tons of empty shells from all this massive building up all over you speak of. Both in Commercial strip centers and houses. Unless "Ghosts" is what you call "occupied" you're living in a fantasy world that many generations beyond your lifetime will be paying for.

(Thumbs Up Icon) , Way to Go.

 

[charrison]

Originally posted by: Ldir

Originally posted by: charrison
President Bush?s most recent tax cut proves that tax rates were, in fact, too high. This is demonstrated through the simple fact that the first half of fiscal year 2004 is showing higher tax revenues than the same period for fiscal year 2003. Between October 2003 and March 2004 (the first half of FY 2004), tax receipts were at more than $850 billion, which is $25.3 billion higher than receipts for the year-ago period.

It only proves you do not know much about tax revenue. It has risen steadily since the early 1900's. It rises after tax increases. It rises after tax cuts. Income tax revenue increases naturally because of economic growth and inflation. Your 2.98% rise is smaller than inflation plus economic growth in the last year. Laffer is still a fraud.


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Bush Apologists of America (BAA): pulling the wool over America's eyes since 1980

Congrats you are the only person that addressed the topic. Inflation no doubt played a part of this, but the fact is the tax cut did not greatly effect revenues coming in.

 

[Spencer278]

Originally posted by: charrison

Originally posted by: Ldir

Originally posted by: charrison
President Bush?s most recent tax cut proves that tax rates were, in fact, too high. This is demonstrated through the simple fact that the first half of fiscal year 2004 is showing higher tax revenues than the same period for fiscal year 2003. Between October 2003 and March 2004 (the first half of FY 2004), tax receipts were at more than $850 billion, which is $25.3 billion higher than receipts for the year-ago period.

It only proves you do not know much about tax revenue. It has risen steadily since the early 1900's. It rises after tax increases. It rises after tax cuts. Income tax revenue increases naturally because of economic growth and inflation. Your 2.98% rise is smaller than inflation plus economic growth in the last year. Laffer is still a fraud.


--------------------
Bush Apologists of America (BAA): pulling the wool over America's eyes since 1980

Congrats you are the only person that addressed the topic. Inflation no doubt played a part of this, but the fact is the tax cut did not greatly effect revenues coming in.

And what would be the tax revenue if there was not any of the bush's gift to the rich?

 

[Ldir]

Originally posted by: charrison

Originally posted by: Ldir

Originally posted by: charrison
President Bush?s most recent tax cut proves that tax rates were, in fact, too high. This is demonstrated through the simple fact that the first half of fiscal year 2004 is showing higher tax revenues than the same period for fiscal year 2003. Between October 2003 and March 2004 (the first half of FY 2004), tax receipts were at more than $850 billion, which is $25.3 billion higher than receipts for the year-ago period.

It only proves you do not know much about tax revenue. It has risen steadily since the early 1900's. It rises after tax increases. It rises after tax cuts. Income tax revenue increases naturally because of economic growth and inflation. Your 2.98% rise is smaller than inflation plus economic growth in the last year. Laffer is still a fraud.


--------------------
Bush Apologists of America (BAA): pulling the wool over America's eyes since 1980

Congrats you are the only person that addressed the topic. Inflation no doubt played a part of this, but the fact is the tax cut did not greatly effect revenues coming in.

I disagree. You ignore economic growth. In the best case, if Dubya's tax cut was responsible for 100% of economic growth, we broke even. Most economists acknowledge his cut had only a small effect on the economy. This means we lost most of the tax revenue economic growth should have created.

 

[chess9]

Military music is to music what supply side economics is to economics; and economics is to reason what phrenology is to reason.

-Robert

 

[ElFenix]

Originally posted by: Spencer278

Originally posted by: charrison

Congrats you are the only person that addressed the topic. Inflation no doubt played a part of this, but the fact is the tax cut did not greatly effect revenues coming in.

And what would be the tax revenue if there was not any of the bush's gift to the rich?

who knows, it's counter-factual. there are so many factors that go in it's hard to say what from what.

 

[ElFenix]

Originally posted by: chess9
Military music is to music what supply side economics is to economics; and economics is to reason what phrenology is to reason.

-Robert

truman asked for a one-armed economist once... when asked why he replied, 'so he can't say, "now on the other hand..."'

 

[MonkeyK]

So which is it? Can a president have an effect on the economy in his term or not?

I keep hearing how the economic genius of Reagan was not seen until Clinton took office. And then how Clinton destroyed the economy in his 8 years.

But now Bush has turned everthing around in one year?

 

[HeroOfPellinor]

Originally posted by: Ldir
I disagree. You ignore economic growth. In the best case, if Dubya's tax cut was responsible for 100% of economic growth, we broke even. Most economists acknowledge his cut had only a small effect on the economy. This means we lost most of the tax revenue economic growth should have created.

Dang...so where did it vanish to, eh?

 

[ElFenix]

Originally posted by: MonkeyK
So which is it? Can a president have an effect on the economy in his term or not?

I keep hearing how the economic genius of Reagan was not seen until Clinton took office. And then how Clinton destroyed the economy in his 8 years.

But now Bush has turned everthing around in one year?

depends on the action they take. some things are long term and are like oak trees... that acorn is nothing now but over time its readily apparent that someone did something long ago... other things are like annuals and show up quickly.

 

[SuperTool]

Basically, it's all Clinton's fault if it's bad, and it's Bush or Reagan achievement if it's good.
The only thing rightwingers can't do is make their policies work without running a deficit

 

[EagleKeeper]

Originally posted by: SuperTool
Basically, it's all Clinton's fault if it's bad, and it's Bush or Reagan achievement if it's good.
The only thing rightwingers can't do is make their policies work without running a deficit

Deficits are usually created to jump start the economy.
Putting $$$ out into circulation will generate a normal economic impulse of 3-5x

Unless people took the Bush tax cuts and saved them, the $$ were spent on goods.
those goods generated revenues and stimulated the need for additional goods and/or workers.

A tax cut/refund gets the funds back into the economy the quickest. It then is up to the economy to take this jump start and run or fizzle. It is this last stage that can take 3-7 years.

The Democrats historically refused to make tax cuts, prefering to create government handouts in the rob from those who are making the money and giving it in a layered buerocracy (sp) to those who "need it".

The money then will get to the people, however, the time lag is much longer and there could be a 25-30% loss in direct aid that is eaten up by the system.

 

[ElFenix]

even if the tax cuts were saved it isn't like the money was just stuffed undera a mattress. sheesh, you people don't seem to know anything about the banking system

 

[Ldir]

Originally posted by: HeroOfPellinor

Originally posted by: Ldir
I disagree. You ignore economic growth. In the best case, if Dubya's tax cut was responsible for 100% of economic growth, we broke even. Most economists acknowledge his cut had only a small effect on the economy. This means we lost most of the tax revenue economic growth should have created.

Dang...so where did it vanish to, eh?

It went into the national debt.

 

[Ldir]

Originally posted by: EagleKeeper

Originally posted by: SuperTool
Basically, it's all Clinton's fault if it's bad, and it's Bush or Reagan achievement if it's good.
The only thing rightwingers can't do is make their policies work without running a deficit

Deficits are usually created to jump start the economy.
Putting $$$ out into circulation will generate a normal economic impulse of 3-5x

Unless people took the Bush tax cuts and saved them, the $$ were spent on goods.
those goods generated revenues and stimulated the need for additional goods and/or workers.

A tax cut/refund gets the funds back into the economy the quickest. It then is up to the economy to take this jump start and run or fizzle. It is this last stage that can take 3-7 years.

The Democrats historically refused to make tax cuts, prefering to create government handouts in the rob from those who are making the money and giving it in a layered buerocracy (sp) to those who "need it".

The money then will get to the people, however, the time lag is much longer and there could be a 25-30% loss in direct aid that is eaten up by the system.

Your theory works if you give tax cuts to spenders. It does not work if you give it to the wealthy. They already spend as much as they want. Their tax cut goes into investments. It might eventually trickle back into the economy.

On another matter, what does it mean when money "is eaten up by the system"? Where does the money go? Here is a hint. It goes back into the economy. Government "waste" is wages, supplies, travel, whatever. It is all money returned to the economy. Government "waste" helps the economy.

 

[HeroOfPellinor]

Originally posted by: Ldir

Originally posted by: HeroOfPellinor

Originally posted by: Ldir
I disagree. You ignore economic growth. In the best case, if Dubya's tax cut was responsible for 100% of economic growth, we broke even. Most economists acknowledge his cut had only a small effect on the economy. This means we lost most of the tax revenue economic growth should have created.

Dang...so where did it vanish to, eh?

It went into the national debt.

Well, I guess if it's in your and my pocket it's considered national debt then.

 

[MadRat]

Spending is not good in and of itself. Meaningful services or tangibles have to be acquired for there to be a positive net effect on an economy in the long term. Building monuments to gloat over, throwing money at problems, and misdirected effort produce negative results in the long term. Unfortunately, as someone pointed out, the $500B deficit easily accounts for the meager jumpstart of the economy. With no meaningful effort at present (the Iraq War cannot be considered a tangible) then there is no long term investment to realize. This is all short-term boost in time for the elections.

There have been some positives of late; fewer natural disasters, an increase in real accountability from the mainstream worker due to trickle down of technology into the private sectors, less bankruptcy applications from rural America, an increase in home ownership, an increase in the price of energy, and the rate of crime has slowly receded from their all-time highs.

Yes, even raising prices for energy can have a positive effect on the economy depending on the situation. In this case its caused the largest shippers of goods to focus their distribution through more energy-efficient large-scale operators. Rising energy costs in the home are usually a boon for companies centered around the services and goods for home repairs and remodelling. Now if we could only squeeze some of that 8% of Mexico's workforce out of the U.S. labour market...

 

[Ldir]

Originally posted by: HeroOfPellinor

Originally posted by: Ldir

Originally posted by: HeroOfPellinor

Originally posted by: Ldir
I disagree. You ignore economic growth. In the best case, if Dubya's tax cut was responsible for 100% of economic growth, we broke even. Most economists acknowledge his cut had only a small effect on the economy. This means we lost most of the tax revenue economic growth should have created.

Dang...so where did it vanish to, eh?

It went into the national debt.

Well, I guess if it's in your and my pocket it's considered national debt then.

:roll: Do you have any clue what a debt is? There is an IOU in Washington with your name on it.

We are all a little dumber for reading your comment.


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Bush Apologists of America (BAA): pulling the wool over their own eyes since 1980