View Poll Results: Tax cuts cost nothing and are free

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  • No way.

    47 40.87%
  • Yes, they are free

    68 59.13%
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Thread: Tax cuts are free

  1. #231
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    Re: Tax cuts are free

    A nice tax analysis.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

  2. #232
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    Re: Tax cuts are free

    Quote Originally Posted by obvious Child View Post
    Turtledude has repetitively argued that tax cuts cost nothing, aka they are free.

    So do you agree, that tax cuts cost nothing, that they are revenue neutral, that they are free?
    The REAL TRUTH:

    In essence tax cuts ARE free. If taxes are cut, government revenue is cut. Therefore government has fewer resources to do malicious things to the people, i.e. fewer officers to harass the people and eat out their substance.

    Yes, there are a few things government must do and get paid for. But that is a tiny percentage of what government currently does.

    Tax cuts are not only free, they pay dividends.
    Last edited by ronpaulvoter; 09-28-10 at 02:15 PM.

  3. #233
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    Re: Tax cuts are free

    Quote Originally Posted by ronpaulvoter View Post
    The REAL TRUTH:
    In essence tax cuts ARE free. If taxes are cut, government revenue is cut. Therefore government has fewer resources to do malicious things to the people, i.e. fewer officers to harass the people and eat out their substance.
    Given that tax cuts are not revenue outlays, they are certainly not spending, and so they do not ever have a cost in that respect.

    The only time a tax cut has a cost of any kind is when:

    1: It results in less revenue for the government
    2: The government makes the choice to spend more revenue that it has

    So, it is imposible to argue that a tax cut, by itself, necessarily has a cost.
    Last edited by Goobieman; 09-28-10 at 02:26 PM.

  4. #234
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    Re: Tax cuts are free

    Quote Originally Posted by Goldenboy219 View Post
    You are talking about the top marginal rate, not the effective tax rate. Government typically takes in around 20% of output regardless of this rate.
    Yeah, I'm talking about the top marginal rate. Since that's the only tax rate being debated in current events at the moment, I assumed that's what we were talking about. My bad...

  5. #235
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    Re: Tax cuts are free

    Quote Originally Posted by Goldenboy219 View Post
    A nice tax analysis.
    Perfect! See, The government can't figure out that 0 (that's a ZERO) means STOP SPENDING all the cash is gone!
    I bet the ****ers run out of gas all the time too.
    From the ashes.

  6. #236
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    Re: Tax cuts are free

    Quote Originally Posted by FederalRepublic View Post
    Yeah, I'm talking about the top marginal rate. Since that's the only tax rate being debated in current events at the moment, I assumed that's what we were talking about. My bad...
    Does 14% real output growth seem realistic following a 5% decrease in the top marginal rate? Can you point to any time in history when we had greater than 14% real output growth?
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

  7. #237
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    Re: Tax cuts are free

    Quote Originally Posted by obvious Child View Post
    Turtledude has repetitively argued that tax cuts cost nothing, aka they are free.
    Turtledude doesn't know what he's talking about.

    Lowering a tax rate or otherwise changing policy to generate less revenue means taking a loss. Unless you offset the loss with a major policy change on the spending end.

    It's a akin to a business not billing for services.

    There is no longer a surplus (thanks W.) and extending the tax cuts will result in lost revenue. How do they purpose to pay the $678 billion?

    This is not a semantics issue, this is fact.

    So do you agree, that tax cuts cost nothing, that they are revenue neutral, that they are free?
    Exactamundo!

    People who listen to right wing radio think this because they lack the education to know any better.

  8. #238
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    Re: Tax cuts are free

    Quote Originally Posted by Goldenboy219 View Post
    Does 14% real output growth seem realistic following a 5% decrease in the top marginal rate? Can you point to any time in history when we had greater than 14% real output growth?
    Now you're going to make me go and do research. I hate doing research...

  9. #239
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    Re: Tax cuts are free

    Quote Originally Posted by hazlnut View Post
    Turtledude doesn't know what he's talking about.

    Lowering a tax rate or otherwise changing policy to generate less revenue means taking a loss. Unless you offset the loss with a major policy change on the spending end.

    It's a akin to a business not billing for services.

    There is no longer a surplus (thanks W.) and extending the tax cuts will result in lost revenue. How do they purpose to pay the $678 billion?

    This is not a semantics issue, this is fact.



    Exactamundo!

    People who listen to right wing radio think this because they lack the education to know any better.
    1) saying those who listen to right wing radio can be lumped into one group proves real ignorance

    2) I find it funny that those who don't manage to make it to the top tax brackets constantly claim that they know more about taxation than those who have

    3) again, you confuse one side of the ledger with the other.



  10. #240
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    Re: Tax cuts are free

    thought i would bump this:


    When we last took up the topic of taxes, we wondered if U.S. President John F. Kennedy's claim that lower tax rates would lead to higher federal tax revenues was true. In our back of the envelope analysis, we compared the tax revenue generating performance of the steeply progressive tax rates of 1954 (with top rates and income brackets similar to those during President Kennedy's tenure) to the much flatter progressive tax rates of 2006, and found evidence that yes, lower tax rates have led to higher collections from personal income taxes over time.

    But these are snapshots in time that suggest that lower tax rates lead to higher personal income tax collections. We wondered what we would find if we connected the dots for the entire post-World War 2 era.

    So that's what we did. The chart below shows the percentage share of U.S. GDP represented by personal income taxes collected by the U.S. government from 1946 through 2006: ...



    Analyzing the data presented on this chart, we make the following observations:

    1. The average percentage of GDP represented by U.S. federal personal income tax revenues from 1946 through 2006 is 8.0%. The percentage share of personal income tax revenues with respect to GDP is normally distributed, with a standard deviation of 0.8%. This defines the typical range for the personal income tax share of GDP of 7.2% to 8.8%.

    2. Recessions (shown by the vertical red bands) often coincide with decreased revenue for the federal government from personal income taxes. This is exactly what we should expect to see, as the total level of income earned falls with employment levels during recessions.

    3. There are unique circumstances that coincide with percentage shares greater than 8.8%:

    * In 1968, the Democratic U.S. Congress and President Lyndon Johnson passed a 10% income surtax that took effect in mid-year. Coupled with a spike in inflation, for which personal income taxes were not adjusted to compensate, this tax hike led to outsize income tax collections in that year.

    * The sustained high inflation of 1978 (7.62%), 1979 (11.22%), 1980 (13.58%) and 1981 (10.35%) led to higher tax collections through bracket creep, as income tax brackets in the U.S. were not adjusted for inflation until 1985 as part of President Ronald Reagan's first term Economic Recovery Tax Act.

    * Beginning in April 1997, the Dot Com Stock Market Bubble created an excessive number of new millionaires as investors swarmed to participate in Internet and "tech" company initial public offerings or private capital ventures, which in turn, inflated personal income tax collections. Unfortunately, like the vaporware produced by many of the companies that sprang up to exploit the investor buying frenzy, the illusion of prosperity could not be sustained and tax collections crashed with the incomes of the Internet titans in the bursting of the bubble, leading to the recession that followed.

    4. Unique circumstances also apply to the one period in which the percentage share of personal income taxes dipped below the lower level of 7.2%.

    * The recession of 1948 is generally considered to be an "inventory recession." Here, inventories soared as consumers had initially satisfied their pent-up demand for consumer products following the end of World War 2, as companies of the era lacked sufficient feedback to be able to better meter their production levels. The rate of unemployment doubled from 1948's level to 7.9% in October 1949, which in turn, sharply decreased personal income tax collections.

    * This surplus of inventory came at a time when many large companies completed their full transition from wartime employment levels to "peacetime" levels, which aggravated the employment situation.

    5. Years in which tax rate cuts took effect (1964, 1970, 1971, 1982, 1987, 1988, 1991 and 2003) all saw government collections of personal income taxes dip initially, then begin to rise afterward, with the total of personal income tax collections always falling in the range between 7.2% and 8.8% of GDP.

    This last phenomenon suggests that the distribution of taxable income shifts in accordance with changes in the tax rate structure of the income tax code to maintain a stable equilibrium with respect to overall GDP, albeit with a small lagging effect. This level of equilibrium is given by a level of personal income tax collections representing 8.0% of GDP, plus or minus 0.8%, which holds in the absence of unique economic and fiscal policy factors.

    Basically, this means that as tax rates change, people shift their level of economic production to account for the change in the tax rate structure, and do so in a way that maintains this overall level of equilibrium.

    In the case of a steeply progressive tax rate structure, people act to reduce their economic output (and income) or channel it in ways so as to avoid the increased level of taxation through personal income taxes. In the case of a flatter tax rate structure, people act to increase their economic output and income, dispense with tax avoidance strategies, and personal income tax collections rise in the years following when the tax rate reduction is first implemented to levels consistent with the natural level of equilibrium.

    Where the economy is concerned, higher, more progressive tax rates would result in both lower levels of GDP and personal income tax collections, while lower, flatter tax rates would result in higher levels of GDP and personal income tax collections...


    We confirm that beginning in 1964, with the first of a series of income tax rate reductions, personal income tax collections have risen at a much faster pace than they did under the highly progressive income tax rate structure that existed from 1946 through 1963, even after adjusting for inflation.

    We'll revisit this latter chart in the future, but for now, we'll observe that regardless of what it might hope to achieve from changing the schedule of tax rates, the government isn't going to get much more than 8.0% +/- 0.8% of the pie called GDP for the effort. The real question is whether it will be 7.2%-8.8% of a growing pie that incents people to be more productive or 7.2%-8.8% of a stagnant or shrinking pie that incents people to become really good at dodging personal income taxes, or just taking it easier.

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