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Trump’s treasury secretary: The tax cut ‘will pay for itself’

Tax cuts rarely cause a loss in revenue. In fact, they usually increase revenue. It's the spending.

I think tax cuts can make a significant difference when they are elevated to the point where they stifle activity. I don't think that is the case now. We are not currently paying too much in taxes. We are demanding things that we don't want to pay for. THAT is the problem. An extra couple dollars in everyones paycheck will do nothing to spur economic activity but will reduce revenue. So in that regard, I think people on the right are still looking at taxes as they did during the Reagan years rather than what they are today.
 
The problem is that they'd eliminate the department, and the funding that they send to the states, without replacing that funding or reducing the tax burden. So the states would be left without federal funding, and the people will not be paying any less to the federal gov't.

It should be illegal for federal government to send money to state and local governments unless it is buying something from them.
 
I don't think it's corruption, as much as Trump getting hit with reality.

Same reason as to why he performed so poorly in his first hundred, and had to back-peddle.

The problem in my view is the reality. It needs to change, not suck people in.
 
I think tax cuts can make a significant difference when they are elevated to the point where they stifle activity. I don't think that is the case now. We are not currently paying too much in taxes. We are demanding things that we don't want to pay for. THAT is the problem. An extra couple dollars in everyones paycheck will do nothing to spur economic activity but will reduce revenue. So in that regard, I think people on the right are still looking at taxes as they did during the Reagan years rather than what they are today.

Historically speaking, that has never been the case. Why do you believe it's different now?
 
Not in the least did you. Krugman style economics we just went through for 8 years... worst recovery ever
Considering the depths of the downturn, how it savaged credit markets, how the global was hit, and that it hit at a time when Americans were ill prepared for a crisis? It was about as good a recovery as the US was going to get.


highest debt load ever...
...due to policies Krugman opposed, such as cutting taxes (primarily on the wealthy) while waging 2 wars. That's just nuts.


huge taxes...
BZZT wrong, effective tax rates are below levels from the 1980s and 2000s, and the only tax increases during the Obama years were on the wealthy -- whose statutory levels are a fraction of that in the 80s, and effective rates are also down a few points since then.


worst level of unemployed...
BZZZT also wrong, unemployment was far worse during the Great Depression, and higher in 1982; and unlike most recessions, unemployment was exceptionally low before it hit.

And again: It was the worst economic downturn since the 1930s. Anyone who expects unemployment -- always a trailing indicator -- to return to normal in six weeks is an absolute idiot.

LFPR is at its lowest point since the 1960s. However, LFPR started dropping in 2001, several years before the recession hit, and is due to factors such as people getting more education, women staying at home to take care of kids, and people retiring. Very little of the drop in LFPR is linked to cyclical factors.


Trump and team are going in a direction that is the antithesis of the Krugman line of economics.
Yes, in the sense that they are proposing an idiotic mess that will only benefit the wealthy.

• They seem to be proposing huge tax cuts for high income earners, and almost nothing for everyone else
• The cuts will undoubtedly increase the deficit, as did Bush 43's cuts
• Trump plans to spend $1 trillion on infrastructure, potentially at a time when we don't actually need the stimulus, which means it may spark inflation which in turn will erode any wage gains
• Trump may still engage in protectionist measures, which will whack the American economy at the knees; e.g. it will cut exports (which generates over $2 trillion in economic activity per year), and currency changes that result from the loss of imports will make the dollar stronger, and in turn encourage... more imports


We'll see where we are at the end of the Trump admin.
Some of us will. But chances are, you won't believe it if the results turn out badly for Trump.

Look at Kansas. Brownback slashed state taxes, in an exceptionally inept way. As a result, Kansas didn't grow faster than its neighbors; didn't reduce unemployment more than its neighbors; and has triggered year after year of fiscal crises, as tax revenues repeatedly fall below estimates. They've had to cut spending to the bone, slash educational spending, raided their highway funding, and decimated their rainy day fund. And people still refuse to accept that cutting taxes caused any problems.
 
It should be illegal for federal government to send money to state and local governments unless it is buying something from them.
You do realize that is utterly ridiculous, right?

The citizens of those states pay federal taxes, and they reasonably expect various services in exchange.

Governments are not retailers. State governments aren't "selling" anything to the federal government. The very idea that federalism should involve that kind of transactional mentality is absurd.
 
Considering the depths of the downturn, how it savaged credit markets, how the global was hit, and that it hit at a time when Americans were ill prepared for a crisis? It was about as good a recovery as the US was going to get.



...due to policies Krugman opposed, such as cutting taxes (primarily on the wealthy) while waging 2 wars. That's just nuts.



BZZT wrong, effective tax rates are below levels from the 1980s and 2000s, and the only tax increases during the Obama years were on the wealthy -- whose statutory levels are a fraction of that in the 80s, and effective rates are also down a few points since then.



BZZZT also wrong, unemployment was far worse during the Great Depression, and higher in 1982; and unlike most recessions, unemployment was exceptionally low before it hit.

And again: It was the worst economic downturn since the 1930s. Anyone who expects unemployment -- always a trailing indicator -- to return to normal in six weeks is an absolute idiot.

LFPR is at its lowest point since the 1960s. However, LFPR started dropping in 2001, several years before the recession hit, and is due to factors such as people getting more education, women staying at home to take care of kids, and people retiring. Very little of the drop in LFPR is linked to cyclical factors.



Yes, in the sense that they are proposing an idiotic mess that will only benefit the wealthy.

• They seem to be proposing huge tax cuts for high income earners, and almost nothing for everyone else
• The cuts will undoubtedly increase the deficit, as did Bush 43's cuts
• Trump plans to spend $1 trillion on infrastructure, potentially at a time when we don't actually need the stimulus, which means it may spark inflation which in turn will erode any wage gains
• Trump may still engage in protectionist measures, which will whack the American economy at the knees; e.g. it will cut exports (which generates over $2 trillion in economic activity per year), and currency changes that result from the loss of imports will make the dollar stronger, and in turn encourage... more imports



Some of us will. But chances are, you won't believe it if the results turn out badly for Trump.

Look at Kansas. Brownback slashed state taxes, in an exceptionally inept way. As a result, Kansas didn't grow faster than its neighbors; didn't reduce unemployment more than its neighbors; and has triggered year after year of fiscal crises, as tax revenues repeatedly fall below estimates. They've had to cut spending to the bone, slash educational spending, raided their highway funding, and decimated their rainy day fund. And people still refuse to accept that cutting taxes caused any problems.

https://www.atr.org/full-list-ACA-tax-hikes-a6996
 
They can't cut spending because the economy will tank.
Instead of spending it only on the military, just spend some on education, health care, and infrastructure (coupled with job training and work for unemployed). Don't go through the Fed to do it, just do it directly, and just look at them like they are crazy when they ask you to consider it debt spending ;)
 
LOL

1) You missed about a dozen points in my post.

2) Your list pretty much just proves what I said.

- Individual mandate only applies to those who fail to have health insurance
- Employer mandate only applies to qualified businesses that refuse to offer health insurance
- ACA income tax only hits households with incomes $250k or higher (i.e. the wealthy)
- Taxes on Cadillac plans hit the wealthy
- Medicare payroll taxes are pretty small; boosting them by ~2% is negligible
- Most of the rest of the taxes are small, and designed to curb behavior, and in several cases hits more affluent people (i.e. households earning $35,000/yr aren't spending that much on tanning services)

So thanks for helping my argument.
 
Historically speaking, that has never been the case. Why do you believe it's different now?

Lets say you cut payroll taxes and the average guy gets $5-6 extra dollars in his check each week. How does that stimulate growth in any way?
 
Lets say you cut payroll taxes and the average guy gets $5-6 extra dollars in his check each week. How does that stimulate growth in any way?

The average guy has low savings rates.

netsavingsbyincome2012.jpg


If those with low/no/negative savings rates receive tax proceeds, it will almost certainly lead to increases in consumption.

However... for those with savings rates close to 40%... how does a tax cut spur additional economic activity?
 
You do realize that is utterly ridiculous, right?

The citizens of those states pay federal taxes, and they reasonably expect various services in exchange.

Governments are not retailers. State governments aren't "selling" anything to the federal government. The very idea that federalism should involve that kind of transactional mentality is absurd.

Wrong. It is important to restore states rights. Federal services should not be payments to states to control what they do. It should be things like the military, treasury, state department and justice. The country would be far better if most of those citizen federal taxes were paid to the states instead and the services delivered there. What they do now is absurd beyond belief to me. But of course you think government is the solutions while I think it is the problem so we see this issue from opposite poles.
 
The average guy has low savings rates.

netsavingsbyincome2012.jpg


If those with low/no/negative savings rates receive tax proceeds, it will almost certainly lead to increases in consumption.

However... for those with savings rates close to 40%... how does a tax cut spur additional economic activity?

So are you agreeing with me or disagreeing with me?
 
So are you agreeing with me or disagreeing with me?

If you increase disposable income for those with low/zero/negative savings rates, such as those making less than $50k/year in 2012 dollars, such policy will increase consumption and investment.

However... if you give a person earning $500k/year a tax break, the additional disposable income will be saved and not spent.
 
Wrong. It is important to restore states rights.

Opionionated drivel.

Federal services should not be payments to states to control what they do.

See my prior response.

It should be things like the military, treasury, state department and justice.

And again.

The country would be far better if most of those citizen federal taxes were paid to the states instead and the services delivered there. What they do now is absurd beyond belief to me. But of course you think government is the solutions while I think it is the problem so we see this issue from opposite poles.

When your opinion isn't accompanied by logic or reasoning, it is of no value on a discussion forum.
 
If you increase disposable income for those with low/zero/negative savings rates, such as those making less than $50k/year in 2012 dollars, such policy will increase consumption and investment.

However... if you give a person earning $500k/year a tax break, the additional disposable income will be saved and not spent.

Yes, but people making less than $50000 would get a few dollars a week extra in their check. What good is that going to do?
 
Lets say you cut payroll taxes and the average guy gets $5-6 extra dollars in his check each week. How does that stimulate growth in any way?

Are payroll taxes also cut for the employer?
 
Are payroll taxes also cut for the employer?

The only payroll taxes the employer pays are the matching SS taxes. Now, cut unemployment taxes or workers comp rates and you are talking real savings for the employer.
 
Yes, but people making less than $50000 would get a few dollars a week extra in their check. What good is that going to do?

Those few dollars would flow from government into the private sector. Given that roughly 70% of all income earners make less than $50k/year... well, this is a boost for the private sector.

And i haven't even begun to bring things up like the multiplier effect, which is derived from the dynamics of savings rates.
 
Those few dollars would flow from government into the private sector. Given that roughly 70% of all income earners make less than $50k/year... well, this is a boost for the private sector.

And i haven't even begun to bring things up like the multiplier effect, which is derived from the dynamics of savings rates.

You are ignoring my question. What sort of economic activity is created by putting an extra 5 bucks a week in peoples pockets? That might net you a Happy Meal at McDonalds but not much more.
 
The only payroll taxes the employer pays are the matching SS taxes. Now, cut unemployment taxes or workers comp rates and you are talking real savings for the employer.

So why are you singing out employee contributed payroll taxes as "tax cuts". Is that what Team Trump is proposing?
 
When you quote Krugman for economic wisdom, you show an utter disregard for the truth. The man is a political hack, kinda like Bill Nye the Not Science guy.

LOL, no, Krugman is in fact an expert in economics, Nobel Prize winner in fact, and he's got a far better record than any conservative economists I've ever run across. He's a liberal - he calls his blog, "Conscience of a Liberal" but he bases his opinions in the data and the evidence and the current state of the economics profession.
 
It does pay for itself but congress keeps raising spending so the deficit keeps growing no matter how much money washington takes in taxes

Uh, no, there is no Tax Fairy, Tax Santa Clause. Sorry...
 
Wrong. It is important to restore states rights. Federal services should not be payments to states to control what they do.
Fortunately, the federal government cannot force states to accept funds.


It should be things like the military, treasury, state department and justice.
What should? The federal government?

Good luck killing off Social Security... lol


The country would be far better if most of those citizen federal taxes were paid to the states instead and the services delivered there.
Sorry, but that's not happening. We killed the Articles of Confederation for good reason.


What they do now is absurd beyond belief to me. But of course you think government is the solutions while I think it is the problem so we see this issue from opposite poles.
lol

I hate to break this to you, but government is government is government. State governments are not necessarily more effective or responsive or "less government" than a federal government.

And the reason why we have a federal government that does so much? It's because the vast majority of people actually want the federal government to do things; and many of the things that happen in one state can affect another and even other nations.

Plus, every single politician who has ever promised to reduce government? They do the opposite. They expand federal spending, they expand federal control, they just curb a handful of regulations to thank their business buddies for their donations.
 
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