Watch your pockets and warn your friends!

[Daisy]

Well, I'm glad you finally admitted [that federal revenue went up so much because the economy grew at a rapid pace].

Hope of Glory, the reasoning that tax cuts will increase revenue, the Trickle Down Theory aka Voodoo Economics, is based on the assumption that the money in the hands of consumers and, even more to the point, businesses does stimulate the economy so much that people and corporations will earn more thus pay more in taxes, enough so to cover the cut in revenue that lower tax rates bring.

How did you think it was supposed to work, magic?

 

[Hope of Glory]

That was the point that I was trying to make all along. That tax cuts increase revenue.

But, when government spending increases at a faster rate, the defecit is going to increase.

So, by association, "increased revenue" and "decreased spending" are not synonymous.

As a result, you raise the tax rates, revenue decreases; how does that help defecit spending.

(Also, as Americans, many people have a short attention span. Most economic actions at the federal level take anywhere from 18 months to 4 years for us to see the results of that action.)

 

[The Galatian]

Barbarian on why Clinton's tax increases worked:
federal revenue went up so much because the economy grew at a rapid pace.

Well, I'm glad you finally admitted this.

It's what I've been trying to tell you. Increases in revenue after tax cuts are temporary. If you try to continue, the increased federal debt starts competing with business for investment money. And then, as your article points out, revenue dropped. That's why revenues dropped as Reagan tried to make Keynsian economics a permanent policy. This is also why business picked up after Clinton's tax increases.

Everyone remembers Roosevelt using Keynsian policies, but few remember that Roosevelt dropped them as soon as the economy recovered.

 

[carpro]

Sorry. Bush's own people say Reagan's tax increase was the largest in inflation-constant dollars, and by far the largest in terms of percentage of GDP. Didn't you read the link. When a republican admnistration admits it, there isn't a whole lot of wiggle room.

Your guy made a good try, though. What he isn't telling you is that federal revenue went up so much because the economy grew at a rapid pace. He points out that revenue fell in Reagan's time. It fell because real income declined. And so fewer taxes.

Check out the Statistical Abstract of the United States, and look up personal income for those periods (use inflation constant dollars).

Doesn't he know that? Sure he does. But he correctly assumed you didn't.

Anyway you cut it. Reagan was the all-time tax-and-spend champion.

And you totally ignored his salient points with no effort at rebuttal, .

"Since the Clinton tax increase, individual income taxes (excluding Social Security) have climbed from 7.8% of GDP to more than 10%. That's the highest rate in U.S. history. Following the Reagan tax cuts of the early 1980s, federal income taxes paid by individuals in fiscal 1984 fell to 7.8% of GDP and then stayed within a relatively narrow range of approximately 7.6% to 8.5% of GDP until the 1993 tax hike."

 

[Daisy]

That was the point that I was trying to make all along. That tax cuts increase revenue.

Ok, how, by what means, do tax cuts increase revenue when most revenue is collected taxes?

But, when government spending increases at a faster rate, the defecit is going to increase.

Yes, when spending outpaces income, the deficit increases. However, my point is that government spending tends to stimulate the economy which will increase revenues which will increase the taxes collected. This is why increased government spending during an economic downturn can be a good thing.

So, by association, "increased revenue" and "decreased spending" are not synonymous.

Right, increased spending can lead to increased revenue. And if you pay down your debt with the increased revenue, that will lead to decreased spending on debt service. The money which is no longer being paid out in interest becomes, in effect, revenue.

As a result, you raise the tax rates, revenue decreases; how does that help defecit spending.

How does raising tax rates decrease revenue when most revenue comes from taxes collected?

I realize that there is a tipping point where taxes become so burdensome that it no longer pays to participate, but I believe we are way far from that point.

(Also, as Americans, many people have a short attention span. Most economic actions at the federal level take anywhere from 18 months to 4 years for us to see the results of that action.)

According to some Republicans, it took Reagan's tax cuts nigh on fifteen years to see fruition in the Clinton term of office, while Clinton's initiatives took approximately eight years, each one taking a shorter time, unless we hit another economic downturn; in that case, it is clearly a lagging Clinton effect.

"Since the Clinton tax increase, individual income taxes (excluding Social Security) have climbed from 7.8% of GDP to more than 10%. That's the highest rate in U.S. history.

What does "GDP" stand for?

 

[Terry_Herrington]

What does "GDP" stand for?

Gross Domestic Product

 

[The Galatian]

And you totally ignored his salient points with no effort at rebuttal, .

Actually, it rebutted your argument:

"Since the Clinton tax increase, individual income taxes (excluding Social Security) have climbed from 7.8% of GDP to more than 10%.

Individuals (as opposed to corporattions) are making more money, and paying more taxes. That's a good thing for everyone.

Why did that happen? Because employment was up.

Why did that happen? Because the federal government was no longer competing with businesses for investment money. So it was cheaper to grow or do a start-up. And therefore, more people were employed. And that means more earnins, and therefore more personal income taxes. BTW, Clinton's increases were progressive, which means the middle class didn't see much of an increase.

That's the highest rate in U.S. history.

Outstanding. It means more people are working and more money is going to consumers, who will buy goods and services, which will prodice more jobs...

Following the Reagan tax cuts of the early 1980s, federal income taxes paid by individuals in fiscal 1984 fell to 7.8% of GDP and then stayed within a relatively narrow range of approximately 7.6% to 8.5% of GDP until the 1993 tax hike."

Yep. Real personal income took a nosedive in the 80s. The mean income didn't drop a lot, but the median dropped like a rock. Why? Because the money was still being gotten, just more and more of it was going to fewer and fewer people.

That's a bad thing. Bad for families, bad for business, and bad for America.

Understand, now?