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RE: Kyl says you don;t have to pay for tax cuts - 7/12/2010 9:44:13 AM   
Archer


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Joined: 3/11/2005
Status: offline 		OK DomKen
Tax cuts are not instant coffee, you're trying to use only the very next year or so in two of your arguments as a citation of effectiveness.

The period of evaluation used in the study cited is 1920-1928 a reasonable period of time to evaluate sustained effects not momentary shifts. (8 years)
The period of evaluation of 1961 to 1968 again a reasonable period of time to evaluate a sustained effect (7 Years)
(Edited to conform to reasonable point DomKen had that was the tax cut didn't really come into being until; 1964/5 so that would be a 3 year period and the increased revenue was still seen just a lesser amount than in the article cited)


The period of 1983 through 1989 again reasonable period to evaulate sustained effect (6 years)



< Message edited by Archer -- 7/12/2010 9:59:52 AM >

(in reply to DomKen)
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RE: Kyl says you don;t have to pay for tax cuts - 7/12/2010 9:51:24 AM   
flcouple2009


Posts: 2784
Joined: 1/8/2009
Status: offline 		Attack the source?  No I am just mentioning that it is not a credible source.  It is source with a purpose and a slant.  I treat their writing with the same respect I would if you posted form the Huffington Post.

"What we can be fairly certain of is that these supply-side tax cut will result in a substantial federal budget deficit, just as they did with Regan's tax cuts.. We need to also be careful when linking marginal tax rates with economic growth given that when the rates were raised in the 1990s the economy took off on a period of such rapid growth that it was dubbed the "New Economy" as it brought back memories to the "good old days" - the 1960s decade of rapid growth when marginal tax rates peaked at 70 percent. There is no good negative link between the rate of economic growth and the highest marginal tax rates.

http://www.uri.edu/artsci/ecn/mead/INT1/Eco/Govt/bush_tax_cuts.htm

This is mostly pertaining to the Bush tax cuts.  There are some interesting foot notes.









(in reply to Archer)
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RE: Kyl says you don;t have to pay for tax cuts - 7/12/2010 10:34:50 AM   
DomKen


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From: Chicago, IL
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quote:

ORIGINAL: Archer

OK DomKen
Tax cuts are not instant coffee, you're trying to use only the very next year or so in two of your arguments as a citation of effectiveness.

The period of evaluation used in the study cited is 1920-1928 a reasonable period of time to evaluate sustained effects not momentary shifts. (8 years)
The period of evaluation of 1961 to 1968 again a reasonable period of time to evaluate a sustained effect (7 Years)
(Edited to conform to reasonable point DomKen had that was the tax cut didn't really come into being until; 1964/5 so that would be a 3 year period and the increased revenue was still seen just a lesser amount than in the article cited)


The period of 1983 through 1989 again reasonable period to evaulate sustained effect (6 years)



You're claiming the tax cuts stimulated growth in the long term. That is not what the Laffer Curve claims. The claim is that tax cuts will result in an immediate increase of tax revenue. Even the economic growth argument is difficult to sustain when historic growth rates are factored into the long term changes in tax revenue.

Take that 28% increase after 8 years between 1981 and 1989 that you cited. That's an averaged annual rate of growth of 3.5%. Which is historically ok but not great growth of the economy. The only case where the economic growth case can be made unequivocably is post 1963, and I'm pretty sure we all agree that a top marginal rate of 90% was a bad idea.

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RE: Kyl says you don;t have to pay for tax cuts - 7/12/2010 12:53:06 PM   
NewOCDaddy


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quote:

ORIGINAL: DomKen


quote:

ORIGINAL: Archer

The tax cuts of the 1920s
Tax rates were slashed dramatically during the 1920s, dropping from over 70 percent to less than 25 percent. What happened? Personal income tax revenues increased substantially during the 1920s, despite the reduction in rates. Revenues rose from $719 million in 1921 to $1164 million in 1928, an increase of more than 61 percent.

Tax Revenue went down in 1922 not up.
http://query.nytimes.com/gst/abstract.html?res=9D00EFD61E3EEE3ABC4F51DFB7678389639EDE

quote:

The Kennedy tax cuts
President Hoover dramatically increased tax rates in the 1930s and President Roosevelt compounded the damage by pushing marginal tax rates to more than 90 percent. Recognizing that high tax rates were hindering the economy, President Kennedy proposed across-the-board tax rate reductions that reduced the top tax rate from more than 90 percent down to 70 percent. What happened? Tax revenues climbed from $94 billion in 1961 to $153 billion in 1968, an increase of 62 percent (33 percent after adjusting for inflation). According to President John F. Kennedy: Our true choice is not between tax reduction, on the one hand, and the avoidance of large Federal deficits on the other. It is increasingly clear that no matter what party is in power, so long as our national security needs keep rising, an economy hampered by restrictive tax rates will never produce enough revenues to balance our budget just as it will never produce enough jobs or enough profits… In short, it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now.

Tax cut in 1964. Revenue went down 1.5%
quote:


The Reagan tax cuts
Thanks to "bracket creep," the inflation of the 1970s pushed millions of taxpayers into higher tax brackets even though their inflation-adjusted incomes were not rising. To help offset this tax increase and also to improve incentives to work, save, and invest, President Reagan proposed sweeping tax rate reductions during the 1980s. What happened? Total tax revenues climbed by 99.4 percent during the 1980s, and the results are even more impressive when looking at what happened to personal income tax revenues. Once the economy received an unambiguous tax cut in January 1983, income tax revenues climbed dramatically, increasing by more than 54 percent by 1989 (28 percent after adjusting for inflation).

Tax cut in 1981. tax revenue went down in 1982. It is hidden in some pretty scary inflation but convert to constant dollars and its about a 0.5% shrinkage.





You do realize that the stimulus effect of a tax cut isnt instantaneous, right?

(in reply to DomKen)
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RE: Kyl says you don;t have to pay for tax cuts - 7/12/2010 12:55:04 PM   
NewOCDaddy


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quote:

ORIGINAL: flcouple2009

Attack the source?  No I am just mentioning that it is not a credible source.  It is source with a purpose and a slant.  I treat their writing with the same respect I would if you posted form the Huffington Post.








Uhhh...that is attacking the source in attempt to discredit the information. Its called ad hominen, and it doesnt wash unless you can prove that it isnt credible. Its far easier to discredit the information itself...which you cant do.

(in reply to flcouple2009)
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RE: Kyl says you don;t have to pay for tax cuts - 7/12/2010 12:59:18 PM   
NewOCDaddy


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quote:

ORIGINAL: DomKen

You're claiming the tax cuts stimulated growth in the long term. That is not what the Laffer Curve claims. The claim is that tax cuts will result in an immediate increase of tax revenue.


The Laffer curve says nothing about timing, just a strawman of your own invention (at least Ive never seen such a ridiculous claim elsewhere). Logic would dictate that any economic stimulus takes time. The only case where there wouldnt be delay, and what is partly responsible for an immediate lack of decline in revenues to the extent of static projections, is a tax rate cut does result in some immediate reporting of income that otherwise wouldnt have been delayed. That is a minor impact compared to the investment effect though.

Fail again, Kendoll.

< Message edited by NewOCDaddy -- 7/12/2010 1:01:09 PM >

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RE: Kyl says you don;t have to pay for tax cuts - 7/12/2010 1:12:35 PM   
DomKen


Posts: 19457
Joined: 7/4/2004
From: Chicago, IL
Status: offline 		Actually sockpuppet you are, as usual, lying.

The Laffer Curve is a unitless bell curve that purports to show the relationship between tax rate and tax revenue. Since the peak of a bell curve is not at at either end the claim is that there exists tax rates, below 100%, where a decrease in rate equals an increase in revenue. Not later down the road when it could have been due to natural economic expansion or any other factor but immediately.

The fact is this myth has been used to sell tax cuts that did not stimulate the national economy, did serve to concentrate wealth in the hands of the wealthy and produced unprecedented levels of public debt. Of course it is possible,as is widely believed by those who pay attention, that even the supply siders know this and this is a conscience attempt to saddle the federal government with crushing debt to render it helpless, achieving Grover Norquist's dream by the back door.

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RE: Kyl says you don;t have to pay for tax cuts - 7/12/2010 1:13:17 PM   
rulemylife


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quote:

ORIGINAL: Sanity


FOX is a legitimate news site, just because you're so far out there that you're unwilling to admit that fact doesn't change the reality.

Linking to thinkprogress is more like linking to Rushlimbaugh.com, thinkprogress is more akin to Rush Limbaugh's web site while MSNBC is like FOX News, despite all the laughable far left propaganda you want to sling.






You do know that the video and quotes in the link were directly from Fox News?

No, I guess you don't.

Try looking at the link next time before putting your foot in your mouth, yet again.






< Message edited by rulemylife -- 7/12/2010 1:14:38 PM >

(in reply to Sanity)
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RE: Kyl says you don;t have to pay for tax cuts - 7/12/2010 1:41:41 PM   
Archer


Posts: 3207
Joined: 3/11/2005
Status: offline 		DomKen the Laffer curve relies on the effect a policy will have on human behavior, just as every economics idea does. Not everyone reacts to or can react to a tax policy that year. and contrary to the detractors short sighted naysaying the Laffer curve does not say every tax cut will result in a gain in revenue.

The Laffer Curve says there is a break point, a tax rate somewhere between but not including 0% and 100 %, for a specific group/ country/ city/ state that will result in  the maximum revenue. That rate depends on many other factors. it might be 90% it might be 5%. A  higher or lower (READ THOSE WORDS 3 TIMES) tax rate than the optimal will result in less revenue.

The Lagffer Curve DOES NOT say a lower tax rate will ALWAYS result in more revenue.

The Laffer curve says the only way to know one way or the other if rates are too high or too low is to shift the rate and see the results.





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RE: Kyl says you don;t have to pay for tax cuts - 7/12/2010 1:48:39 PM   
DomKen


Posts: 19457
Joined: 7/4/2004
From: Chicago, IL
Status: offline 		The Laffer Curve by Laffer himself:





It can't be clearer than that. Notice the complete lack of time as a scale. Go read the claims made by supply siders over the years. It's always been that tax cuts will be deficit neutral or result in more revenue immediately not 10 years down the road.


Attachment (1)

< Message edited by DomKen -- 7/12/2010 1:51:11 PM >

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RE: Kyl says you don;t have to pay for tax cuts - 7/12/2010 1:53:35 PM   
willbeurdaddy


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quote:

ORIGINAL: DomKen

The Laffer Curve by Laffer himself:





It can't be clearer than that. Notice the complete lack of time as a scale. Go read the claims made by supply siders over the years. It's always been that tax cuts will be deficit neutral or result in more revenue immediately not 10 years down the road.



Youre right. It cant be clearer than that. there is no time scale, which says exactly that ...there is no time scale claimed. Find one claim that the impact is immediate.

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RE: Kyl says you don;t have to pay for tax cuts - 7/12/2010 1:55:22 PM   
mnottertail


Posts: 60698
Joined: 11/3/2004
Status: offline 		and the laffer curve is a min/max proposition, and that in and of itself is bankrupt.  The actual situation as Invis has alluded to is more a case of find the area under the curve.



_____________________________

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RE: Kyl says you don;t have to pay for tax cuts - 7/12/2010 2:05:14 PM   
Archer


Posts: 3207
Joined: 3/11/2005
Status: offline 		Nothing relying on human behavior can ever hope to be instantaneous for all people.

Raise the rates and some folks will continue to work for a marginally lower pay rate.
Lower the rate and some folks will move their investments faster than others.



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RE: Kyl says you don;t have to pay for tax cuts - 7/12/2010 2:18:23 PM   
DomKen


Posts: 19457
Joined: 7/4/2004
From: Chicago, IL
Status: offline
quote:

ORIGINAL: willbeurdaddy


quote:

ORIGINAL: DomKen

The Laffer Curve by Laffer himself:





It can't be clearer than that. Notice the complete lack of time as a scale. Go read the claims made by supply siders over the years. It's always been that tax cuts will be deficit neutral or result in more revenue immediately not 10 years down the road.



Youre right. It cant be clearer than that. there is no time scale, which says exactly that ...there is no time scale claimed. Find one claim that the impact is immediate.

So you're reduced, as always, to claiming that somewhere sometime tax revenues went up because the tax rate went down.

In reality Friedman's Permanent Income Hypothesis is the correct predictor of economic action after a tax cut and it directly contradicts supply side "wisdom."

(in reply to willbeurdaddy)
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RE: Kyl says you don;t have to pay for tax cuts - 7/12/2010 2:25:44 PM   
DomKen


Posts: 19457
Joined: 7/4/2004
From: Chicago, IL
Status: offline
quote:

ORIGINAL: Archer

Nothing relying on human behavior can ever hope to be instantaneous for all people.

Raise the rates and some folks will continue to work for a marginally lower pay rate.
Lower the rate and some folks will move their investments faster than others.

Should it really lag 5, 6 or 8 years behind?

The 1981 tax cuts are the supposed best example of supply side theory in application but it took until 1985 just to return to the 1981 level. Not to dramatically exceed. Just to get back to even.

You're not really claiming that it took half a decade for the upper income brackets that got the Reagan cuts to notice?

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RE: Kyl says you don;t have to pay for tax cuts - 7/12/2010 3:15:13 PM   
willbeurdaddy


Posts: 11894
Joined: 4/8/2006
Status: offline
quote:

ORIGINAL: DomKen


quote:

ORIGINAL: willbeurdaddy


quote:

ORIGINAL: DomKen

The Laffer Curve by Laffer himself:





It can't be clearer than that. Notice the complete lack of time as a scale. Go read the claims made by supply siders over the years. It's always been that tax cuts will be deficit neutral or result in more revenue immediately not 10 years down the road.



Youre right. It cant be clearer than that. there is no time scale, which says exactly that ...there is no time scale claimed. Find one claim that the impact is immediate.

So you're reduced, as always, to claiming that somewhere sometime tax revenues went up because the tax rate went down.

In reality Friedman's Permanent Income Hypothesis is the correct predictor of economic action after a tax cut and it directly contradicts supply side "wisdom."


Ok. I have finally realized that you arent actually debating these topics, but attempting to be some sort of Turing machine.

1) A refutation of the Laffer curve not referencing a timeline "reduces" something to the strawman of the what the Laffer curve actually says? Whatever intelligence there is in that is certainly artificial. It is a total non-sequiter.

2. Friedmans PIH contradicts supply side? Thats pretty clever since PIH is a theory of CONSUMPTION, not a theory on economic stimulus of tax cuts.

Congratulations. You actually had us thinking you were serious all this time.

(in reply to DomKen)
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RE: Kyl says you don;t have to pay for tax cuts - 7/12/2010 3:32:42 PM   
willbeurdaddy


Posts: 11894
Joined: 4/8/2006
Status: offline
quote:

ORIGINAL: DomKen


quote:

ORIGINAL: Archer

Nothing relying on human behavior can ever hope to be instantaneous for all people.

Raise the rates and some folks will continue to work for a marginally lower pay rate.
Lower the rate and some folks will move their investments faster than others.

Should it really lag 5, 6 or 8 years behind?

The 1981 tax cuts are the supposed best example of supply side theory in application but it took until 1985 just to return to the 1981 level. Not to dramatically exceed. Just to get back to even.

You're not really claiming that it took half a decade for the upper income brackets that got the Reagan cuts to notice?


Wrong again. In 1984 revenues exceeded pre-tax cut levels. 377 vs 344.

You also play fast and loose with your "half a decade" bullshit. The first portion of the tax cut didnt take effect until October of 1981. Even if all of it took effect at that time, and even if you were correct that it was 1985 before revenues returned to pre-tax cut levels, thats about 3 1/2 years on average, not half a decade.
Then there is the fact that the tax cuts werent even fully implemented until mid-1983, 1984 being the first full year of the tax cuts, and revenues increased by 1984.

Real GDP growth for the 4 years before the tax cuts averaged .9%. For the 4 years after the tax cuts, 4.8%.





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RE: Kyl says you don;t have to pay for tax cuts - 7/12/2010 3:39:35 PM   
mnottertail


Posts: 60698
Joined: 11/3/2004
Status: offline 		This is the reagan thingie, right?  so after a decade of languishing economy, the fix came down to tax cuts?   No pent up demand at all?  No problem in tripling the debt there, creating artificial growth  (yanno, mil spending, star wars research and so on) thru federal socialism (as some are wont to call it)?

I aint buying it.

_____________________________

Have they not divided the prey; to every man a damsel or two? Judges 5:30


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RE: Kyl says you don;t have to pay for tax cuts - 7/12/2010 4:24:24 PM   
DomKen


Posts: 19457
Joined: 7/4/2004
From: Chicago, IL
Status: offline
quote:

ORIGINAL: willbeurdaddy


quote:

ORIGINAL: DomKen


quote:

ORIGINAL: Archer

Nothing relying on human behavior can ever hope to be instantaneous for all people.

Raise the rates and some folks will continue to work for a marginally lower pay rate.
Lower the rate and some folks will move their investments faster than others.

Should it really lag 5, 6 or 8 years behind?

The 1981 tax cuts are the supposed best example of supply side theory in application but it took until 1985 just to return to the 1981 level. Not to dramatically exceed. Just to get back to even.

You're not really claiming that it took half a decade for the upper income brackets that got the Reagan cuts to notice?


Wrong again. In 1984 revenues exceeded pre-tax cut levels. 377 vs 344.

You also play fast and loose with your "half a decade" bullshit. The first portion of the tax cut didnt take effect until October of 1981. Even if all of it took effect at that time, and even if you were correct that it was 1985 before revenues returned to pre-tax cut levels, thats about 3 1/2 years on average, not half a decade.
Then there is the fact that the tax cuts werent even fully implemented until mid-1983, 1984 being the first full year of the tax cuts, and revenues increased by 1984.

Real GDP growth for the 4 years before the tax cuts averaged .9%. For the 4 years after the tax cuts, 4.8%.

Don't know where you got your numbers.
1981 tax revenue 766.6 Billion
1984 tax revenue 730.4 Billion
(both in constant dollars (1987 dollars to be precise))

(in reply to willbeurdaddy)
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RE: Kyl says you don;t have to pay for tax cuts - 7/12/2010 4:33:40 PM   
DomKen


Posts: 19457
Joined: 7/4/2004
From: Chicago, IL
Status: offline
quote:

ORIGINAL: willbeurdaddy
2. Friedmans PIH contradicts supply side? Thats pretty clever since PIH is a theory of CONSUMPTION, not a theory on economic stimulus of tax cuts.

The Laffer Curve suggests that there is a tax rate such that a reduction in it is an immediate stimulus to economic activity. IOW new and expanded business or investment.

PIH says a tax cut is assumed to be a temporary matter and the windfall will be used to pay down debt or saved.

We can all examine the aftermath of the various tax cuts and see that the tax cuts did not result in unusual length or rates of growth. As a matter of fact by all standards the 30 years since the 1981 tax cuts have been marked by what could best be described as historically anemic growth despite multuiple rounds of supply side tax cuts. To further prove the point the concentration of wealth in the hands of the wealthiest has increased.

Friedman is right and Laffer is wrong.

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