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Location: Jonquil City (aka Smyrna) Georgia- by Atlanta
16,259 posts, read 24,763,471 times
Reputation: 3587
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I turned on the TV and almost fell over. I actually witnessed a Republican that pretty much laid to BS what the rest of the Republicans chatter about cutting the budget and/or balancing the budget. This Republican was honest in saying that spending cuts would have to be broad based and include that sacred cow the military as well as the sacred cow entitlements because there is no way to cut all that money out of 15% of the Federal budget. So RAND PAUL gets the 1/2 political award for HONESTY. Now, he will have to admit that TAX INCREASES will have to come into the equation too if we are to ever get out of red ink. Then he will get the other 1/2.
You sound a little like Obama, stating that the government has to "pay" for tax cuts.
Balancing a budget from a "fixed wealth" perspective reveals a penchant for redistribution. Tax revenues CAN increase during a time of tax cuts, if you will look at the historical record and ignore the droning of liberal mantras.
That's just the factual reality. Tax cuts must be paid for by offsetting spending cuts or they blow up the deficit.
BTW it is refreshing to hear a Republican speak so frankly and honestly about the level of cuts needed to balance the budget. I don't expect him to keep being honest for very long though as no doubt they will grab him and force him to roboticly repeat their nonsense talking points no matter what the actual truth is.
It's gonna be a tough act to work out. Either the Repo's will pave a successful path to 2012 or things will change again. And that won't be in a progressive socialist direction.
Location: Jonquil City (aka Smyrna) Georgia- by Atlanta
16,259 posts, read 24,763,471 times
Reputation: 3587
Quote:
Originally Posted by Oerdin
That's just the factual reality. Tax cuts must be paid for by offsetting spending cuts or they blow up the deficit.
BTW it is refreshing to hear a Republican speak so frankly and honestly about the level of cuts needed to balance the budget. I don't expect him to keep being honest for very long though as no doubt they will grab him and force him to roboticly repeat their nonsense talking points no matter what the actual truth is.
Rand will be beaten and tortured until he says "uncle" to McConnell & Co.
Location: Jonquil City (aka Smyrna) Georgia- by Atlanta
16,259 posts, read 24,763,471 times
Reputation: 3587
Quote:
Originally Posted by irishvanguard
You sound a little like Obama, stating that the government has to "pay" for tax cuts.
Balancing a budget from a "fixed wealth" perspective reveals a penchant for redistribution. Tax revenues CAN increase during a time of tax cuts, if you will look at the historical record and ignore the droning of liberal mantras.
There is a point somewhere where that does not hold true anymore. Otherwise we could cut all taxes to 1% and the revenue would still go up.
I turned on the TV and almost fell over. I actually witnessed a Republican that pretty much laid to BS what the rest of the Republicans chatter about cutting the budget and/or balancing the budget. This Republican was honest in saying that spending cuts would have to be broad based and include that sacred cow the military as well as the sacred cow entitlements because there is no way to cut all that money out of 15% of the Federal budget. So RAND PAUL gets the 1/2 political award for HONESTY. Now, he will have to admit that TAX INCREASES will have to come into the equation too if we are to ever get out of red ink. Then he will get the other 1/2.
Excellent post and, sadly, extremely true. The real solution to America's budget deficit will have to be spending cuts and tax increases. We can't continue having century low tax rates any more then we can continue to have 65 year high spending. There simply isn't enough discretionary budget cuts which anyone could agree on to balance the budget without tax increases. The total discretionary budget is $1.8 trillion (including the military which makes up 50%, or $900 billion of the discretionary budget) and to balance the budget we'd need to cut $1.2 trillion of that $1.8 trillion or ~2/3rs. No one thinks anyone will do that at least not anyone who has the slightest amount of sense. If we do what Boehner suggests and say the military is off limits then we have a total pool of just $900 billion and it is impossible to cut $1.2 trillion from a total budget of $900 billion. It's just mathematically impossible.
The final solution will have to involve steep spending cuts combined with increasing the average tax rate from where it currently is which is the lowest average tax rate in a century. We just can't do it any other way.
There is a point somewhere where that does not hold true anymore. Otherwise we could cut all taxes to 1% and the revenue would still go up.
Even the good father of "tax cuts pay for themselves" has publicly admitted his theory only works on EXTREMELY high tax rates of 80% or more because it relays on people spending so much time trying to game the system that it becomes cheaper to do that then actually pay their taxes. Current gross tax rates, before the mountain of exemptions, write offs, give aways, and loop holes is just 36% (and even that only on income above $150,000 [so the part of the income below $150,000 is taxed at lower rates]) so their just isn't the incentive to spend so much time, money, and effort trying to get out of paying taxes. They are the lowest in a century after all.
Even according to the laffer curve cutting taxes below the supposed laffer maximum only results in reduced income not increased tax revenue. Laffer put that maximum in the 70%-90% range which is waaaaayyyyyyy above our current top rate of 36% but, still, the dullards continue to lie and talk about things they have no comprehension of simply because some liar on the radio spoon fed it to them.
There is a point somewhere where that does not hold true anymore. Otherwise we could cut all taxes to 1% and the revenue would still go up.
As many here know, the Laffer Curve is the theoretical graphic representation of tax rates versus government income. Since the real world is so complex, attempts to translate it into real numbers is problematic. But the general idea is that government revenues will continue to grow in tandem with increasing tax rates, until the point is reached where the level of taxation causes disincentives to work, incentives to do other things, and overall stifling of economic growth.
Personally, I don't think government revenues SHOULD be maximized. This simply allows the growth of a too-large, over-regulating, supremely wasteful organization that runs on taxpayer money but serves the interests of those Special Interests that line their campaign coffers (like the military-industrial complex).
In a perfect world, if taxes were cut to 1% we would see incredible prosperity in America. We cannot imagine the extent of it, because every dollar is taxed every time in changes hands, and is also taxed in many ways when it doesn't move at all. Think of the huge economic boom that resulted even after wages stagnated decades ago, as people used their homes to allow massive credit spending. That, of course, was not sustainable since the Middle Class is no longer allowed to have decent paying jobs.
What we should be asking is what a more perfect government would look like, and how large it really needs to be. The all-powerful Federal Government that we currently have is not an evolution toward "best," but instead is the disastrous result of failing to heed the Founding Fathers' warnings. We are no longer the economic powerhouse of the world, and we will continue to decline until something major changes in Washington. Which, under the current system, is impossible.
Even the good father of "tax cuts pay for themselves" has publicly admitted his theory only works on EXTREMELY high tax rates of 80% or more because it relays on people spending so much time trying to game the system that it becomes cheaper to do that then actually pay their taxes. Current gross tax rates, before the mountain of exemptions, write offs, give aways, and loop holes is just 36% (and even that only on income above $150,000 [so the part of the income below $150,000 is taxed at lower rates]) so their just isn't the incentive to spend so much time, money, and effort trying to get out of paying taxes. They are the lowest in a century after all.
Even according to the laffer curve cutting taxes below the supposed laffer maximum only results in reduced income not increased tax revenue. Laffer put that maximum in the 70%-90% range which is waaaaayyyyyyy above our current top rate of 36% but, still, the dullards continue to lie and talk about things they have no comprehension of simply because some liar on the radio spoon fed it to them.
When the Laffer Curve was popularized the top tax rate was 70%. It suggested a drop to 50%, which according to the curve would be optimal. And it worked. The share of taxes paid out by the top 5% increased from 48% to 57% between 1980 and 1989. The lower the tax rates went, the higher the revenue generated.
Same for the capital gains tax. It was cut in 1981 and from that point on revenue increased sevenfold, reversing several years of negative gains. When the cut expired in 1987, revenue actually dropped for several years following the change.
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