Wahoo, tax cuts could already be in effect!

[Michael]

Russ - Do you have a source to it being a "fact" that rate cuts = more revenue? I know that it is a theory, and one that appears to be proven by recent facts, but rates were raised by Clinton and revnues increased as well. My background is in accounting and finance, not economics, but from what I've read over the last 6 months or so is that more revenue with lower rates is just a theory.

By definition, it cannot be a fact in all cases (cut rates to zero and revenue will not increase). There also were a whole bunch of other micro and macroeconomic events taking place when the rates were cut last time, so there is no hard proof that the rate cuts were what made the difference.

I prefer rates cuts as a pump-priming mechanism as it leaves less money for the government to spend when things get better (government is almost impossible to cut once it starts sucking down money).

Moonbeam - At a certain point, the rich always get more absolute dollars from a tax cut. the interesting thing is the definition of rich, of course. You can raise the lower limit at which you have to pay tax. However, the more you raise it, the less and less people will benefit from it as the rate exceeds their income and they get no further benefit. The only way to have the less rich (most Americans are rich compared to much of the Earth's population) get more benefit is to give them money from those more rich.

Michael

 

[Ulfwald]

this is for all you bedwetting liberals:


The left just loves to refer to the Reagan years ad the "Decade of Greed." The implication is that higher income types got away with absolute murder during the '80's when it comes to paying income taxes. Well, let's take a look at some statics from the Internal Revenue Service to see just what the various income levels were paying in income tax in 1981, and what they were paying in 1991.

1983 -- THE BEGINNING OF THE DECADE OF GREED -- THE YEAR THE REAGAN TAX BREAKS TOOK EFFECT.

Here we find the top 1% of all income earners in the United States paying a total of 20.3% of all of the personal income taxes collected by the IRS. The top 10% were paying 49.7% of all income taxes, and the top 50% was paying 92.8%. The bottom 50% of all income earners were payign only 7.2% of all income taxes.

1993 -- THE DECADE OF GREED ENDS! CLINTON RAISES TAXES TO THE EVIL RICH WILL PAY THEIR FAIR SHARE!

Ten years later, in 1993, we find the top 1% of all income earners paying 28.7% of all income taxes collected! Wow! Those rich SOB's really got away with murder, didn't they? The top 10% saw their share of total income taxes collected go from 49.7% to 58.8%. The greedy so-and-so's. The top 50% saw their share rise to 95.2% of all taxes, while the bottom 50% saw their share drop from 7.2% to 4.8%.

IT'S 1998 --- HOW ARE THE EXPLOITERS OF THE POOR DOING NOW?

The September 23, 1998 issue of The Wall Street Journal has the new numbers for us. The share of the taxes being paid by the top 1% has gone up again! For the year 1966 they are approaching 33%.

YEAH .. BUT THOSE RICH BASTARDS ARE EARNING SO MUCH THEY STILL WEREN'T PAYING THEIR FAIR SHARE

OK, fine. What would you consider a fair share? If the top 10% was earning 70% of all the income but only paying 58% of the taxes, that wouldn't be fair, would it? Well ... let's see what the figures show.

In 1993, at the end of the Decade of Greed, the top 1% were paying 28.7% of all taxes. They earned only 13.8% of all earned income. Oops! sounds like they are paying a bit more than their fair share, doesn't it? What about the top 10%? They were paying 58.5% of the income taxes but earning only 39% of the income. The top 50%? Paying 95.2% of the taxes, earning 85% of the income. The bottom 50%? Earning only 15% of the income but paying just 4.8% of the income taxes.

Update ... In 1996 the share of the income earned by the top 1% reached 16%. Remember: They're paying one third of all the taxes.

So ... who is getting away with not paying their fair share? Looks like the bottom 50% to me ... not the evil, hated, mean, nasty, wicked rich.

These figures came from The Tax Foundation and IRS Statistics, 1983 through 1993. You go and do your own research and verify them! Then tell me just what the hell Bill Clinton was talking about when he said that the rich need to pay "their fair share."

Excuse me ... I have to go throw up.

 

[Russ]

Michael,

Try Kennedy, 1961 and Reagan, 1981. In both cases revenues increased dramatically; in the latter, they nearly doubled during his term.

Why do you think that the major concern expressed by many economists was that a tax rate cut would stimulate the economy long term and that we might encounter a time when this stimulous would be harmful?

If rate reductions did not increase revenue by putting more money to work in the private sector, that would not be an issue.

ulfwald,

There you go, confusing the liberals with facts again.

Russ, NCNE

 

[Moonbeam]

Hehe Russ, like tagej you shadow box with arguments of your own creation. I neither said, nor do I believe that resources are static. The question I pose is whether wealth is accumulating at the top. Do fewer and fewer people own more and more, whether those few change places or not. If so that there are implications and they may not all be positive. Bush's plan adds to that phenomenon. I question, therefore, whether it is the best way to go. Now if you have some evidence that that the gap in the distribution of income is not widening or makes no difference you could offer some intelligent rebutal to what I've said.

"To punish achievement in order to reward lethargy is to erode the very foundation of the economy itself." There are numerous unexamined assumptions here. The first is that we objectively evaluate achievement. The school teacher isn't worth an MBA. All people who do not have money are lethargic. Oh Man, what can I say? What we do is apply market forces to worth without factoring in the downsteam hidden cost. A black and white world makes a great fantasy, but reality comes in all shades of gray.

 

[Michael]

Russ - That doesn't make it a "fact". I don't know much off the top of my head about the early 60's, but I do know that the 80's had much more than just a tax cut. To isolate the tax cut as the only reason or even the main reason why revenue went up doesn't make sense to me.

I remember very well that government spending was greatly increased in the 80's plus the baby boom generation started to hit prime earnings years. I'm sure there was much more at work than just the rate cut. Maybe the rate cut is the reason, but I'm not convinced and back the rate cut now for other reasons.

ulfwald - Somewhat interesting statistics, but the affordability of taxes also have to be taken into account. The lower a person's income, the less there is left over after the bare necessities to live are paid for. As income rises, there is more and more "disposable" income that can be taxed.

I also wonder what the definition of 'earned" income is. If non-taxable income (such as interest for T-bills) was taken into account, do the percentages still hold? Statistics are fun to play with ...

Michael