Tax Cuts mean HIGHER Tax Revenues!

[DKW 86 7,969]

The Graph

One of thousands of articles that actually tell the truth.

The problem in the eighties was not Reagan, it was a Demo HOR that spent like Sailors in a whore house.

[CShine 0]

One has to wonder if this author even bothered to look at his own charts. Click on your second link. Once you get there, go down to the last link at the bottom of the page entitled, "Total Tax Revenue per Taxpayer, 1960-2002."

Remember the big tax increases in the Lyndon Johnson administration? OK, look at the steep tax revenue increases late in his Presidency. Hmmm.

Now look at the 1990's. Remember that Bush Sr. increased taxes in 1990, and Clinton increased taxes again in each of his first two years of office. No tax cuts in that period. Now look at the big rise in tax revenue that followed those three straight tax cuts. Notice how it's much larger than the revenue increase we saw after the Reagan cuts.

How do they explain this? The answer is, they don't. Right-wing economists like to trumpet the Reagan cuts, which is all fine and good. But over all the years that I've seen these kind of articles, I've never ONCE seen any of them even LOOK at the fact that in both the 1960's and the 1990's the exact opposite kind of tax policy was followed by an enormous surge in tax revenue.

These authors must take us for simpletons. Obviously, there are a whole lot of other things that play into this tax revenue equation. Tax rates drive revenue all by themselves. Tax policy is most certainly not the kind of make-or-break factor that these folks want you to believe it is. Quite clearly, they are selling something, tax cuts for their rich buddies, and they want to cherry pick just one example out of the entire history of the American economy and say it alone proves this point. Why don't they look at the whole history of tax increases and tax cuts?? I'll tell you why, because when they do THAT their whole sales pitch comes tumbling down like a house of cards.

The problem in the eighties was not Reagan, it was a Demo HOR that spent like Sailors in a whore house.

Reagan signed ALL of those spending increases into law. The Dems did not have a veto-proof majority in Congress. If he had wanted to veto those spending increases he could have, and the Dems could not have done a single thing about it.

This whole tax rate sales pitch is hogwash. People who try to sell you garbage like this while deliberately ignoring the facts of history are nothing but charlatans. I'm still waiting for someone to actually make a credible case that tax rates alone drive federal revenue. It doesn't hold water, but they keep trotting out their cock-and-bull story thinking that if they say it enough times we'll all believe it. That's standard operating procedure for the Heritage foundation, the ultimate mouthpiece of the super-rich. They really do think that the average person is just plain stupid, and that they can fabricate a truth out of absolute nonsense. What a buncha fools.

[CarolinaTiger 0]

Remember the big tax increases in the Lyndon Johnson administration? OK, look at the steep tax revenue increases late in his Presidency. Hmmm.

if you look at the graph immediately before the one you reference this one, CShine, it appears johnson cut the top bracket rate early in his presidency (coincidently, the period you observe the increase in revenues per taxpayer)...it also looks like in 1967, when the tax rate did go up, you actually observe that blip downward in revenues during johnson's administration...

likewise for the bush I tax increase. revenues actually went down during the year the tax increase occured... (1991 it looks like).

clinton's tax increase (the one he deemed as being too large), however, did result in more revenues according to the graphs.

AND, a point i didn't read in your post...Bush II's tax cuts coincided in a drop in tax revenues per taxpayer....

yet, as you state later on, there are factors other than tax cuts that could drive these figures.

in fact, clinton left rates level after his too large of a tax increase, and revenues continue to spiral upward!

naturally, we could attribute these last two observations (Bush II's and Clinton) to their divergent tax policies or something else, like economic cycles.

[CShine 0]

CarolinaTiger,

You better look at that graph title again. It only graphs the tax rates for the richest tax bracket in the country. That is only the tax rate for the richest of the super-rich. It tells nothing at all about the rates for the rest of the nation.

likewise for the bush I tax increase. revenues actually went down during the year the tax increase occured... (1991 it looks like).

Yes, and then they immediately rebounded and rose to a level higher than existed before the tax increase, and all without any new tax cuts whatsoever.

My point is NOT that tax increases automatically equal instant revenue increases. My point is that the Heritage foundation and others are trying to sell us a bill of goods by saying that tax increases automatically equal revenue increases and tax hikes lead to the opposite. It's a bunch of bunk that's not borne out by history. Quite clearly, there are many other factors in play, and I don't presume to understand them all. But I am sharp enough to see when someone is trying to sell me a load of crap.

[CarolinaTiger 0]

CarolinaTiger,

You better look at that graph title again. It only graphs the tax rates for the richest tax bracket in the country. That is only the tax rate for the richest of the super-rich. It tells nothing at all about the rates for the rest of the nation.

i saw that, CS...i thought somewhere i referenced the "top bracket" rate in my post.

if not, my bad.

[CarolinaTiger 0]

it appears johnson cut the top bracket rate early in his presidency

emphasis added

CS: are you saying that these presidents/congresses lowered the tax brackets for the top wage earners while raising (or leaving flat) the rates for the lower wage earners?

i'm certainly no historian, but i don't recall that phenomenon happening.

ct

[CarolinaTiger 0]

...Quite clearly, there are many other factors in play, and I don't presume to understand them all. ...

ditto.

[CShine 0]

Oh, one more example I forgot to mention, Reagan himself signed a tax increase in 1984. Everyone look at the graph and see what immediately happened. Tax revenue went up.

The Heritage foundation really thinks people are just plain stupid.

[DKW 86 7,969]

Without doing a PhD Dissertation here, the tax rate is a partial reciprocal of the savings rate. What does that mean? Savings is a reciprocal of the "rate of spending." In other words, the deep research here will, and evidently has, gone over most of the board's head here. In Ecomomics it is called the multiplier effect.

To sum it up: Tax rates reductions supply economic fuel to the engine that is the economy, ala JFK. They truly drive the economy forward, but so does govt deficit spending, ala FDR. Bush has done all he can to drive the economy forward, he cut taxes across the board and went to deficit spending.

The end of this argument is this. What 20th Century President argued "Sound Fiscal policy in the face of a recession"? "Sound fiscal policy uber alles?" "Sound Fiscal Policy, Jobs be damned?"

It was none other than Herbert Hoover. That is correct folks, the Dem Party is now arguing the policies of Hoovernomics, The Father of the Depression.

I fully understand the balanced budget concept, I hope and pray we get there soon. But unfortunately we are at war and in a recession. But Congress and the President have not done well here, but to dismiss DECADES of Democratic overspending is just ludicrous.

Someone want to name the last decade a Dem HOR had a balanced budget? Was it the late 60s? If the Dems get control over the HOR, mark it down we will NEVER SEE A BALANCED BUDGET AGAIN.

[CShine 0]

That's the way to do it, DKW. When every single thing in your BS link gets shot down, just ignore it all and act like it never happened.

P.S. - The very idea that today's Democrats are the same thing as Herbert Hoover is so ridiculusly laughable that you've done nothing but discredit yourself.

[DKW 86 7,969]

That's the way to do it, DKW. When every single thing in your BS link gets shot down, just ignore it all and act like it never happened.

P.S. - The very idea that today's Democrats are the same thing as Herbert Hoover is so ridiculusly laughable that you've done nothing but discredit yourself.

Sorry, where was that Dem Balanced Budget Congress? I didnt hear you?

Didnt think you would respond because this is one topic you are lost in guy, TOTALLY LOST! Then Dems never even admitted there was a chance for a Balanced budget in the 1996 Campaign, they are totally clueless how it got there and have no clue how to get there now.

Clinton shows Budget Deficits until 2002 and 2003

And there are literally hundreds of these articles. Clinton and the Dems even refused to admit Balanced Budgets were possible until after 2003. They called the 1996 Newt Gingrich 7 Year budget Balancing Plan crazy, etc.

The Dems never wanted a balanced budget, now they simply use it to justify stoopid tax increases for their equally stoopid reasons.

[DKW 86 7,969]

That's the way to do it, DKW. When every single thing in your BS link gets shot down, just ignore it all and act like it never happened.

P.S. - The very idea that today's Democrats are the same thing as Herbert Hoover is so ridiculusly laughable that you've done nothing but discredit yourself.

I never saw where you did say thing but back up my contention that tax cuts make revenues increase over time. Your post said so.

Thanks for playing.

[DKW 86 7,969]

Now look at the big rise in tax revenue that followed those three straight tax cuts. Notice how it's much larger than the revenue increase we saw after the Reagan cuts.

Your words betray you.

You just wrote about how 5 tax cuts raised revenues substantially.

Who is the fool?

[Donutboy 0]

Oh, one more example I forgot to mention, Reagan himself signed a tax increase in 1984. Everyone look at the graph and see what immediately happened. Tax revenue went up.

The Heritage foundation really thinks people are just plain stupid.

There are tax cuts, tax increase and hidden tax increases. One of the largest tax increases in my years of paying taxes was implemented by the Reagan administration. However, since it was a "hidden" tax increase, it was not reported as a tax increase but a change to the tax code. No tax rates went up but tax revenues did.

Prior to the Reagan administration, consumer interest was a deductible expense. The Reagan administration changed the tax code to exclude the interest on cars, boats, credit cards and personal loans, etc. BTW, this was a compromise measure between the Democrats in Congress and the President. In exchange for the interest deductions on the middle class, Reagan allowed capital gains to be taxed for the first time.This more than anything will explain the increase in tax revenues as it removed several thousand dollars of deductions for most taxpayers and added capital gains to the tax code as a taxable entity. While he'll go down in history as a tax cutter, the fact remains that he removed probably the largest tax deduction that the average Joe had, thus raising taxes more than he cut them. This would also explain the increase in revenues from his "tax cuts".

I'm old enough to remember this and I'm sure there's a few of you Republicans old enough to remember it as well. BTW, the republicans have been trying to get the capital gains tax removed every since their compromise. I don't have a problem with that, as long as they restore the deduction for consumer interest!!

[Donutboy 0]

Bump!!! Thanks for the subject of taxes David. I'm sure we'll be hearing it a lot this fall. I don't understand the Democrats commit suicide part though.

David, are you old enough to remember the Reagan years or just reminiscing through Rush Limbaugh? Taxes increased more under Reagan than in any presidential administration prior to his administration.

Reagan's big tax increase of 1982

.....But tax experts generally exonerate him of the charge of

promoting the biggest tax increase in U. S. history.  That

distinction, most agree, belongs to the increase signed into law by

President Reagan in 1982, when Mr. Bush was vice president.  That

bill called for an estimated $152.3 billion in tax increases over

four years.  In today's dollars, the Reagan increase would total more

than $200 billion.  The Clinton proposal, by contrast, calls for $150

billion over four years......

[DKW 86 7,969]

The 86 and 82 tax adjustments were actually called Revenue Redistributions? I am remembering that right? 82 was a true tax cut. The 86 was a simplification of the tax code and elimination of lots of special interest loop holes. They also cut taxes to the middle class and initiated a "user fee" system that charged individual companies and persons that took advantage of certain govt provided services.

I like those type of user fees. Wish we did more of that. But I am sure that anything Bush or the Reps did would be considered a tax cut for the rich.

BTW, I wasnt the one claiming 5 tax cuts all generated more revenues, but I will take the support.

[Donutboy 0]

The 86 and 82 tax adjustments were actually called Revenue Redistributions? I am remembering that right? 82 was a true tax cut. The 86 was a simplification of the tax code and elimination of lots of special interest loop holes. They also cut taxes to the middle class and initiated a "user fee" system that charged individual companies and persons that took advantage of certain govt provided services.

I like those type of user fees. Wish we did more of that. But I am sure that anything Bush or the Reps did would be considered a tax cut for the rich.

BTW, I wasnt the one claiming 5 tax cuts all generated more revenues, but I will take the support.

BUMP!!! I like this topic!!

But the fact remains that Reagan passed the largest tax increase in American history, thus your increase in revenues. Rush Limbaugh revisionist history ignores all of the fee increases, tax deduction eliminations and new sources of tax income and focuses only on the lowering of the top tax rates under the Reagan administration. True history reveals that Reagan raised taxes on more than one occasion.

Raising taxes

......Reagan may have resisted calls for tax increases, but he ultimately supported them. In 1982 alone, he signed into law not one but two major tax increases. The Tax Equity and Fiscal Responsibility Act raised taxes by $37.5 billion per year, and the Highway Revenue Act of 1982 raised the gasoline tax by another $3.3 billion.

According to a recent Treasury Department study, TEFRA alone raised taxes by almost 1 percent of the gross domestic product, making it the largest peacetime tax increase in American history. An increase of similar magnitude today would raise more than $100 billion per year.

In 1983, Reagan signed legislation raising the Social Security tax rate. This is a tax increase that lives with us still, since it initiated automatic increases in the taxable wage base. As a consequence, those with moderately high earnings see their payroll taxes rise every single year.

The following year, Reagan signed another big tax increase in the Deficit Reduction Act of 1984. This raised taxes by $18 billion per year or 0.4 percent of GDP. A similar sized tax increase today would be about $44 billion.

The Consolidated Omnibus Budget Reconciliation Act of 1985 raised taxes yet again. Even the Tax Reform Act of 1986, which was designed to be revenue-neutral, contained a net tax increase in its first two years. And the Omnibus Budget Reconciliation Act of 1987 raised taxes still more.

The year 1988 appears to be the only year of the Reagan presidency, other than the first, in which taxes were not raised legislatively.....

[CarolinaTiger 0]

DB now sounds like howard dean, w/ all the references to rush.

keep going, DB...you're "on to something"!

[Donutboy 0]

DB now sounds like howard dean, w/ all the references to rush.

keep going, DB...you're "on to something"!

Just setting the record straight!! I know the revisionists in the Republican party love to talk about Ronald Reagan, the tax cutter. I was paying taxes before, during and after the Reagan years. Anyone who thinks taxes went down under Ronald Reagan are badly mistaken!!

[DKW 86 7,969]

But DB, they were not across the board like the Dems like, they were to selcted users and those that chose not to particiapte could do so. I really like the simplification too. Too bad the Dems started selling loopholes to the rich and special interests again tho. We went right back to where we were.

The Dems controlled Congress back then. That is how the loopholes got back open. You need money to run an election, sell a loop hole. Politics as usual.

[Donutboy 0]

But DB, they were not across the board like the Dems like, they were to selcted users and those that chose not to particiapte could do so. I really like the simplification too. Too bad the Dems started selling loopholes to the rich and special interests again tho. We went right back to where we were.

The Dems controlled Congress back then. That is how the loopholes got back open. You need money to run an election, sell a loop hole. Politics as usual.

But see, you're wrong David. By eliminating the deductions on consumer interest, Reagan eliminated the largest tax deduction the working stiff had. I know some people have the option of paying cash for vehicles but the majority of workers don't have that option and finance them. Interest on vehicles routinely run into thousands a year. Before the Reagan "tax cuts", you could deduct that amount from your taxes at the end of the year and usually get a nice check from the IRS. Today you can't. The same can be said of credit card interest. Anyone pay interest on their credit cards in 2003? Prior to Reagan, that interest would have been a tax deduction for you.

[TitanTiger 21,584]

I don't think encouraging people to take on more debt by making all the interest tax deductible was a good idea to begin with.

[DKW 86 7,969]

I don't think encouraging people to take on more debt by making all the interest tax deductible was a good idea to begin with.

Heck, Donut, ever heard of a second mortgage?

I facilitate Dave Ramsey's FPU at church. I do not condone anyone borrowing. But just for sake of argument, you can get a second mortgage, and get a credit card for the account. I know Regions and maybe Amsouth do this. I also know folks that buy cars this way too. I do not recommend it tho.

There, happy now? Your deduction is back because all mortgage int, 1st and 2nd, are tax deductible.

[CCTAU 3,658]

I don't think encouraging people to take on more debt by making all the interest tax deductible was a good idea to begin with.

Heck, Donut, ever heard of a second mortgage?

I facilitate Dave Ramsey's FPU at church. I do not condone anyone borrowing. But just for sake of argument, you can get a second mortgage, and get a credit card for the account. I know Regions and maybe Amsouth do this. I also know folks that buy cars this way too. I do not recommend it tho.

There, happy now? Your deduction is back because all mortgage int, 1st and 2nd, are tax deductible.

But most of the poor working stiff don't own homes????

Basically, it was a demoncratic style luxary tax. I would have thought you guys would have loved that.

And it was selective. Nobody HAS to own a car...just move close to work and use a bicycle. Only the RICH have cars and get tax breaks.......