"Tax cuts pay for themselves" DEBUNKED (by Bush Sr.)

A common republican talking point to aid in forking over billions to the wealthy is that tax cuts "pay for themselves". This is been proven false by economists, history, and those pesky mathematical facts. It has also been called "voodoo economics" by Daddy Bush.

I'll let Rachel Maddow work her journalistic magic (without a chalkboard)

reply to post by 12GaugePermissionSlip


In a way, I agree. Cuttng taxes for individuals doesnt really help. However, I believe we should go to a zero Federal tax rate for businesses and hopefully states will follow. We need to create jobs in this country, and what better way to do it.

That and it only seems fair that each person pay an equal amount of tax, regardless of wealth. It just doesnt make sense to punish a person just because they are more successful.

reply to post by 12GaugePermissionSlip


Actually tax cuts do pay for themselves.

This is something both Keynesian and Austrians agree on for the most part.

The economic function that dictates this is called the Laffer curve.



I suppose I should qualify that:

By agree on, they agree that there is a "revenue" maximizing point for government taxes, not that we should have taxes or government in the first place.



[edit on 19-7-2010 by mnemeth1]

reply to post by ZuluChaka


Let's do some math Zulu.
If the bottom 50% of Americans only hold 2.5% of the nation's wealth, and the top 1% own 42.7%, and 83% of all the stock, how much money would the bottom 50% pay in taxes at a 15 % rate, versus the top 1%?

reply to post by mnemeth1


Please. That is the same old tired crap that has been proven false.

The Laffer Curve offers the false promise that we can cut taxes without making any sacrifice on the spending side, and that's simply not true. It's the economic equivalent of arguing that you can lose weight by eating mor
www.politicsandcurrentaffairs.co.uk...

Tax Cuts Don't Boost Revenues
www.time.com...

Debunking One of the Worst Ideas in Economics
finance.yahoo.com...

Tax Cuts Raise Revenue COMPLETELY DEBUNKED
mydd.com...

reply to post by 12GaugePermissionSlip


I just read the Time magazine article, and its a lie.

The reason why the Regan tax cuts didn't pay for themselves is because Reagan didn't actually cut any spending.

He increased spending.

HOWEVER - the Reagan tax cuts DIRECTLY BOOSTED GDP which means in terms of GDP, the government spent less.

I'm not sure where they dug up the economists that don't believe this is true, but they are in the minority, contrary to what the magazine article says.

He offers no sources, just his opinion.

There has been a metric ass ton of work on this in all the major economics journals, just look here:

scholar.google.com...

There is so much economic literature on the Laffer curve that I couldn't even begin to list it all. We are talking thousands of papers.


[edit on 19-7-2010 by mnemeth1]

reply to post by mnemeth1


It's an awesome theory, but it doesn't work in reality, or at least not in this country.

by the way, from the Yahoo article:

when applied to the U.S., it's intellectually dishonest. The Laffer Curve offers the false promise that we can cut taxes without making any sacrifice on the spending side, and that's simply not true. It's the economic equivalent of arguing that you can lose weight by eating more.

Let me be perfectly clear: I'm not arguing that tax cuts are bad. I'm simply pointing out that we can't pretend that tax cuts won't require reductions on the spending side to balance the budget.

Which is exactly what I said.

The Time article is nothing but lies.

The Yahoo article is closer to the truth, but the economist writing it doesn't understand how the government spending reduces growth through misallocation of resources.

The economist writing the Yahoo article is a Keynesian, so he doesn't get the resource allocation problem.

He's also a democratic socialist:
en.wikipedia.org...

[edit on 19-7-2010 by mnemeth1]

reply to post by mnemeth1


OK, screw Charles Wheelan. Can you say, yes or no, The Laffer curve looks good on a napkin, but has proven to NOT work for us?

Originally posted by 12GaugePermissionSlip
reply to post by mnemeth1

 

OK, screw Charles Wheelan. Can you say, yes or no, The Laffer curve looks good on a napkin, but has proven to NOT work for us?

I have looked at the economic evidence for the Laffer curve extensively.

As far as it portends to show economic activity will be better under lower taxes - it is absolutely correct.

I might also add it is probably correct in that tax cuts will indeed pay for themselves - IF GOVERNMENT CUTS SPENDING.

The exact proportion of how much additional revenue is generated by the tax cuts is debatable, but what is not debatable is that lower taxes will give us more economic growth.

I personally feel the correct level of taxation is zero.

Of course, I also feel the correct level of government is zero.

If you progressively stopped taxing the wealthy — the more you earn, the less tax you pay — it would reinvigorate the economy like nothing that has gone before. People wouldn't FEAR becoming wealthy and would strive to climb the economic ladder to tax-free status.

What? You say that would wreck America? Why?

Oh, because you're acknowledging that the wealthy ALREADY carry the overwhelming burden of income tax in America, and that they are ALREADY supporting the Middle and Lower classes, which is undeniable FACT. The wealthy are the economic engine of America.

Tax cuts and rebates do work, providing a much needed influx of cash back into the economy — because the Middle and Lower classes spend their rebates immediately.

— Doc Velocity

Lowering taxes and thereby growing GDP has to be accompanied by limiting federal government to the Constitutional level of powers granted to it in order for it to work. Of course lowering taxes while growing government and expense will not work, as so many people with excessive debt but really nice houses and cars will attest to.

[edit on 7/20/10 by Ferris.Bueller.II]

reply to post by mnemeth1

As far as it portends to show economic activity will be better under lower taxes - it is absolutely correct. I might also add it is probably correct in that tax cuts will indeed pay for themselves - IF GOVERNMENT CUTS SPENDING.

And I can concede that if we didn't pay as much tax we would all have more money, however the other problem is you have rich greedy people that would rather hoard cash than create more jobs, as the theory goes. We have seen this pattern again and again.

As far as spending goes, 2 wars.

Originally posted by 12GaugePermissionSlip
reply to post by mnemeth1

 

As far as it portends to show economic activity will be better under lower taxes - it is absolutely correct. I might also add it is probably correct in that tax cuts will indeed pay for themselves - IF GOVERNMENT CUTS SPENDING.

And I can concede that if we didn't pay as much tax we would all have more money, however the other problem is you have rich greedy people that would rather hoard cash than create more jobs, as the theory goes. We have seen this pattern again and again.

As far as spending goes, 2 wars.

Rich people would rather not horde their cash than create jobs.

Do you think rich people build money rooms where they roll around in their money?

What do you think they do with that money?

reply to post by mnemeth1


The Laffer curve has not been agreed upon by economists as far as I know.
What they did agree on is that we are to the left of the middle, which means if we lower taxes then tax revenue falls. If we increase taxes we get closer to the center, because we are not on the right side, and thus tax revenue increases.

Keynesian economics is like applying a band-aid to pretty up an injury that requires longer term medical attention. It might look better for now but the next time it bleeds it'll just be worse.

My question is why should anyone not pay some federal tax? Another question is why should someone continually pay a higher percentage just because they make more money?

If a guy who makes 40k paid 8% flat that would be 3200 dollars in fed taxes and a guy who makes 200k would pay 16k. Both drive on the same roads, but the 40k would be using services that the 200k perosn would never use, but what we have is the 40k pays zero fed taxes and gets all the services and the 200k pays about 60k.

I just have a hard time seeing this as fair, and much of this is supported by propaganda that pushes the view that those who make more will lie, cheat and steal their way out of taxes i.e. "the evil rich" when the facts show otherwise. We see this with another propaganda line of "only the rich get tax cuts" well no #, since they are the ones who pay TAXES!

Now we also see this with businesses in it is a fact when taxes are low they profit, create jobs, and the economy grows. When we tax the crap out of them they downsize, stagnate and drop employees to make a profit. I am convinced that much of this is pushed by the Liberals not because they believe any of it, but just because there are more votes in the lower income range and whether you make 100 bucks or a million it still equals one vote each.

reply to post by LOLZebra


I have 2.4 million economics papers that say otherwise, from both sides of the isle.

reply to post by Doc Velocity

People wouldn't FEAR becoming wealthy and would strive to climb the economic ladder to tax-free status.

Here is another lame talking point.

Entrepreneur:"I think I will start a new ______ business. I'll buy my goods at this price and assemble them, then sell it for this and make $10 million. Oh, wait....then I'll have to pay some taxes, so I will only make $7 million. Oh well, I'm scared of that, so screw it."

I am sure that happens everyday.

reply to post by Xtrozero



"My question is why should anyone not pay some federal tax?"

because taxes require violence and deprive people of their rightful property?

because taxes drain the productive private sector of needed capital?

because taxes go to fund things like wars, ponzi-schemes, and bank bailouts?

because private charity does a better job of taking care of the poor than ponzi-schemes?

reply to post by mnemeth1


Aye I just learned about that this semester, it's up in the air in my mind.

economists agree that they disagree.