Just what is a “tax cut” or a “tax increase”? If we lower the income tax rate, as President G. W. Bush did, it is advertised as a “tax cut”. Looking at the actual results however reveal that it indeed was a “tax increase.”
Revenues to the Federal Government in 2001, when Bush took office, were about 1.99 trillion. In 2008, when he left office, they were about 2.52 trillion, a gain of 27 percent.
Adjusting for inflation during this period still produces a gain of 4 percent. In my book if revenue goes up, this is a “tax increase.”
A similar calculation (with similar results) can be made for the Reagan income tax rate cuts.
Now let’s look at the spending side of the equation. Under Bush the spending went up 31 percent adjusting for inflation.
This is nearly eight times the revenue increase. When this happens year after year, you amass a substantial deficit.
If Harkins decided to raise his movie ticket prices to $100 per ticket would he make more or less money? Less, obviously, because he’d sell next to zero tickets. High tax rates produce similar results. People, especially the rich, will not expose their money to high tax situations, exactly where the exposure should be placed to grow the economy. If tax rates are too high, reducing them results in more economic activity and higher total tax revenue.
But uncontrolled spending can swamp revenue increases.
Moral: Don’t blame tax rate reductions for our current deficit problem.
Steve Ball
Gilbert
Leon Ceniceros posted at 6:10 am on Tue, Aug 2, 2011.
WOW.........GREAT TO SEE ...100%...."REAL" ...AMERICANS SPEAKING UP.
I AM SICK AND TIRED OF SEEING OUR LEFT-WING LIBERAL....TV MODERATORS (WOLF BLITZER(CNN)....TED SIMMON(KAET-PBS)...EVERY ON ON CNBC AND MSNBC..........EVERY LOCAL AND NATIONAL NEWSPAPER ......REPORTING ...BIASED...ANTI-CAPITALISM....ANTI-WHITE...ANTI-AMERICAN...ANTI-CHRISTIAN..........GARBAGE....EVERY SINGLE DAY.
I WATCHED WOLF BLITZER TRYING TO GOAD REPUBLICAN SENATORS AND CONGRESSMEN/WOMEN TO COME OUT AGAINST ....MICHELLE BACHMAN....YESTERDAY FOR HER...."NO" VOTE.
YOU HAVE TO ASK YOURSELF WHAT IS WRONG "UPSTAIRS AND MAYBE...DOWNSTAIRS".....WHEN YOU SEE THESE MEN LIKE WOLF BLITZER....LIKE TED SIMMONS FROM OUR LOCAL "HORIZON" SHOW AT 7PM ON CHANNEL 8....LIKE THE MODERATORS ON..MSNBC...WHO ...."HATE...HATE...HATE"...MICHELLE BACKMAN AND SARAH PALIN.......THIS "HATE" GOES BEYOND ...POLITICS...AND INTO....GOSH KNOWS WHERE (YUCK).
I WAS WATCHING CNN AND THEY WERE ...HIGHLIGHTING THEIR TWO ..."STAR"...COMMENTATORS....FAREED ZAKARIA AND CHRISTIANE AMANPOR....AND I THOUGHT TO MYSELF......"WAIT A DOG-GONE MINUTE....WHY IS A...."KOKANI MUSLIM FROM INDIA" (FAREED ZAKARIA)....AND A....WOMAN BORN IN....."IRAN OF ALL PLACES"......
LECTURING AMERICANS ON WHAT THEY AND THERE COUNTRY ARE DOING WRONG.......BOTH AT HOME...........AND ABROAD.
ISN'T IT BAD ENOUGH WE HAVE A MUSLIM-BORN (KENYA..HAWAII...INDONESIA...WHATEVER)...PRESIDENT .....AN THE TELEVISION...24/7....TELLING AND LECTURING TO THE 100% "US BORN"...AMERICANS TOO.
Dale Whiting posted at 8:15 am on Tue, Aug 2, 2011.
Steve,
Then explain why we have a down turn in revenues and yet the Bush tax cuts remain in place? Gotcha!
antirino posted at 10:19 am on Tue, Aug 2, 2011.
Not so fast Dale. Economics does not ride just on one factor. Revenue has decreased recently because of a severe recession, the root causes go way back to sub-prime lending and the collapse of mortgage-backed securities which had been sold throughout the financial system. If fewer people are working, fewer people are paying income tax and presto! less government revenue. Attempts to “fix” that problem (caused by government regulation I might add) have instead exacerbated the problem.
Recent regulatory restrictions and uncertainties about future tax rates and the guaranteed cost increases to business of the looming Obama-care have dampened hiring. Also the explosion of Federal debt and its future effect on borrowing in the private sector has severely dampened the prospects of robust economic growth in the private sector.
And I’m not letting Bush off the hook on this one. As pointed out in the letter the debt increased a great deal under Bush (due to increased spending not tax rate reductions which actually increased revenues). Obama, however, has tripled the rate of debt increase.
Books have been written about this. It would be instructive to read one or at least an essay which outlines the major contributors to our current situation. Tax rate reductions under Bush are not the problem. Yet many Democrats are trying to use the argument you just made to impugn the tax rate reductions today, even after years of showing they increased revenue. To point to the real culprit of the prolongation or this recession would be to indict Obama’s recovery policies but I’m afraid that is where most of the current blame lies