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The Bush tax cuts have essentially created the longest period in several decades where the tax rates have remained unchanged, having been in existence longer than the actual rates they cut. Therefore the current tax rates have become the norm; it is kind of stupid to argue what "would have been" after more than a decade. This is especially true considering that between 2004 and 2007, the deficit fell sharply, and even achieved surplus in the final months of 2007 despite the tax cuts.
Furthermore, tax rates used to be in the 70% - 90% range from 1936 - 1981 yet there were still budget deficits aside from a handful of years. The US ran a budget surplus every year 1920 - 1930, yet the top marginal rate was only 25% after 1923. In the late 90s the top rate was just over a third of what it was in the 40s and 50s, yet surplus was achieved. Clearly tax rates are not the only factor when it comes to the deficit.
Nobody is saying it is, but do you accept it has contributed substantially to the deficit, two other major issues being recession and spending.
Of course I will acknowledge that provided the rates were higher, the deficit might be smaller, but that would be pure speculation. Read this:
The Reagan Tax Cuts: Lessons for Tax Reform (http://www.house.gov/jec/fiscal/tx-grwth/reagtxct/reagtxct.htm - broken link)
Quote:
Originally Posted by EinsteinsGhost
BTW, this hasn't been the longest period with virtually same rate. For reference.
The Bush tax cut passed in 2001, and was accelerated in 2003. That is 10 years (2001-2010) with the same rates. The most recent time they remained the same was in the 70s at 70% for a period of 10 years, and, as I said, that was several decades ago.
No they are not.. The 2003 tax cuts increased revnue to the federal government almost immediately. Of course you can sit here and ignore this, but only a fake Einstein would do such a thing.
It's just "Responding" to an issue of dramatic importance in this country! This silly administration simply has it's head in it's ass. Never been to an economics seminar or course I guess. Or simply trying to reinvent this Republic into something the commie manifesto relates to.
So........... what do you think this lousy guy occupying the White House is up to?
Of course I will acknowledge that provided the rates were higher, the deficit might be smaller, but that would be pure speculation. Read this:
The Reagan Tax Cuts: Lessons for Tax Reform (http://www.house.gov/jec/fiscal/tx-grwth/reagtxct/reagtxct.htm - broken link)
Not everything is based on speculation. Some of it is observed and some of it is calculated based on known factors (see CBO studies). Perhaps we can look back at the history as well.
You'd earlier claimed that we've always had deficits despite high tax rates. That isn't entirely true. For that, I will break the period following WWII based on tax rate trends, and the longest would be the two decades following WWII when tax rates were as high as they ever have been, first major tax cut (1960s) and its effect over the next decade, the Reagan tax cut, the Clinton tax increase and the Bush tax cuts. And I will mention deficit as a percentage of the GDP for a baseline (could do it in constant dollars as well, if you prefer).
Late 1940s- Late 1960s: Ultra high tax rates
There were deficits for sure, but mostly within 1-2% of the GDP (the worst was following the recession of 1958, at 2.6%). But there were also seven years (you could say, one every three years) surplus years, with the best being at 4.6% in 1948.
Late 1960s Tax Cut: And the decade following it
There was one year with a surplus... 1969. The rest of the decade plus period was marred with deficits with worst showing up in 1975 (3.4%) and 1976 (4.2%). The last time we would see a budget deficit under 2% until late 1990s would be 1979, at 1.6%.
Reagan Tax Cut:
The deficits crept up to hover above 5% of the GDP (6% in 1983, but that may be partly due to recessionary effect). And BTW, Reagan signed eleven tax increases following his first cut, and most significant being in 1987 which helped the growing deficit a little, even if temporarily. As it turns out, Reagan was far more pragmatic than Bush and his descendents in the government today, and their supporters.
Clinton Tax Increase:
The deficit was creeping up again when Clinton took office. With tax increase implemented, the deficit started to come down immediately. When Clinton took office, deficit was 4.7% of the GDP, it went down every year, (3.9%, 2.9%, 2.2%, 1.4%, 0.3%) and ultimately to the positive (surplus) territory (0.8%, 1.4%, 2.4%, 1.3%). The last year was marked with recessionary effect, and before first Bush tax cuts went into effect.
Bush Tax cuts:
Well, we would never see surplus again. Starting with 1.5% deficit a year after the recession, the last budget had a 9.9% deficit (never mind the fact that substantial expenditures, like those involving the wars were not included in the budget).
So, while tax cuts aren't solely responsible for deficits, tax rates have played a significant role in deficits versus surpluses. And if CBO knows what it is doing, the impact of Bush tax cuts is relatively mild through next couple of years (if we can call 40% of deficits that), and it starts to increase rapidly after 2015 (60% of the deficit in 2016. While other contributors are expected to shrink in their impact on deficit based on current circumstances, the tax cuts will actually increase the deficits overall as it influence increases at a greater pace than is compensated for by shrinking in other areas.
Federal Employee Hiring & Pay Freeze (except military)
NO EARMARKS
NO BLANK CHECKS
FISCAL ACCOUNTABILITY FROM the FED and CONGRESS
AUDIT the FED NOW!
There's a different topic for that discussion. I've seen you there, so it isn't that you're aware of it. Perhaps you can provide a total of how much doing what you say, should be done (and ignore tax rates) and take the discussion there.
The government should rescind all the laws it made since 1868, just let everyone keep all the money they make! Brilliant! Then the poor will starve to death, the sick will die and rich corporations could hire their own armies to protect their assets and Sean Hannity will no longer need to be on TV. Perfect!
but why the tax cuts now if we are only going to have to pay for them later?
There's no such thing as the "Bush Tax Cuts." There is no standard schedule of tax rates that has some basis in reality, because every year government at all levels grows and demands more taxes. Government tax policy is a bunch of politicians setting arbitrary rates of confiscation of people's wages, (knowing that every every dollar taken from a wage-earner is a dollar he can't spend at the local level to stimulate his local economy). It is just as reasonable to argue that the Bush rates are the "standard" rates, and the higher rates before were a period of extra-high taxes.
The government confiscated more of the citizens' earnings before Bush. Bush re-set the rates so that government confiscated less than it had before. Before Bush, a family of 4 earning under $16,500 a year paid 15% to the Federal Government. Under the tax rates of his administration, this poorest-of-families paid only 10%.
People who advocate the expiration of the "Bush tax cuts" are simply advocating a massive increase in federal income taxes: the largest tax increase going to the poorest families, by the way (10% raised to 15%).
And let's not forget, this increase is added to the huge burden of the new and increased taxes buried in Obamacare, most of which haven't even been noticed yet (I still can't find a tally of the total new taxes imposed under Obamacare).
"The National Bureau of Economic Research has concluded that the combined federal, state, and local government average marginal tax rate for most workers to be about 40% of income." "http://en.wikipedia.org/wiki/Economy_of_the_United_States
So with government already taking this much, how much more can the average citizen afford to give it? Everyone still has to pay living expenses and save for the kid's college and (if possible) retirement. Shall we all forfeit our retirements and the kids' college so that we can get the total of government debt down to only $10 trillion, instead of the $13 trillion already on the books?
It's not as if confiscating even 100% of everyone's wages would solve the problem of government overspending on a monumental scale--we'd still be deep in debt. Our nominal GDP was estimated to be $14.3 trillion in 2009, while the debt is about $13 trillion, with another $1.6 trillion to be added by the end of 2010.
Could government take the entire GDP in taxes, hypothetically? No. "GDP is merely a gross tally of products and services bought and sold, with no distinctions between transactions that add to well-being, and those that diminish it. Instead of separating costs from benefits, and productive activities from destructive ones, the GDP assumes that every monetary transaction adds to well-being, by definition. It is as if a business tried to assess its financial condition by simply adding up all "business activity," thereby lumping together income and expenses, assets and liabilities."
Say we all accept massive tax increases, and give government every penny we have, after cutting back our cost-of-living to mere subsistence levels (not that government cares how much of your earnings you actually need to survive). Would this solve the debt problem? No. Because government, even now, will STILL NOT STOP overspending.
Give a politician a tax dollar, he'll spend it, print $10 more (causing every dollar you earn to be worth less) and borrow $10 more (to be paid back with interest later), and then say "Look at the deficit and debt! We must increase taxes!"
I don't think anyone will argue that increasing taxes EVEN MORE now, with the economy deep in recession, 8 million jobs already lost, and no sign of hope on the horizon, will do anything other than cause further economic devastation. The government cannot parasitize off of a dead host.
As to the basic problem, the solution is obvious. If we have to cut the size of government to half, or by 90%, then go right ahead. Immediately stop ALL salaries and benefits to ALL the elected officials, current and retired. Let's have the sacrifices made by the irresponsible crooks that created the mess.
EVERYONE's right...............Fair flat rate tax system now!
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