Just what is a "tax cut" or a "tax increase"? If we lower the income tax rate, as President G.W. Bush did, it is advertised as a "tax cut." Looking at the actual results, however, reveals that it indeed was a "tax increase."
Revenues to the federal government in 2001, when Bush took office, were about $1.99 trillion. In 2008, when he left office, they were about $2.52 trillion, a gain of 27 percent. Adjusting for inflation during this period still produces a gain of 4 percent. In my book, if revenue goes up, this is a "tax increase."
A similar calculation (with similar results) can be made for the Reagan income tax rate cuts.
Now let's look at the spending side of the equation. Under Bush the spending went up 31 percent adjusting for inflation. This is nearly eight times the revenue increase. When this happens year after year, you amass a substantial deficit.
If Harkins decided to raise his movie ticket prices to $100 per ticket, would he make more or less money? Less, obviously, because he'd sell next to zero tickets. High tax rates produce similar results. People, especially the rich, will not expose their money to high tax situations. If tax rates are too high, reducing them results in more economic activity and higher total tax revenue. But uncontrolled spending can swamp revenue increases.
Moral: Don't blame tax rate reductions for our current deficit problem.
Steve Ball, Gilbert
A_Rose_By_Any_Other_Name posted at 11:35 am on Fri, Aug 19, 2011.
You couldn't have stated the obvious much plainer than that Steve. Thanks for pointing this out. Many of the readers still wont get it even though the Harkins analogy was perfect. Imagine that. Under Bush baby, as opposed to Bush daddy, taxes go down but tax revenues go up. Could it really be that simple that by giving people their own money back we could actually create such growth in the economy that tax revenues increase? No liberal tax and spend democrat will believe this claim yet it's a fact every economist in the country will tell you actually happened.
A_Rose_By_Any_Other_Name posted at 11:51 am on Fri, Aug 19, 2011.
It should also be pointed out to the democrats that the largest of the deficit increases under Bush baby occurred in his second term. In his second term the democrats controlled both houses of congress, AKA - the purse strings. In Bush babies first term the deficit rose 7.1% with a republican congress. In his second term the deficit rose 20.7% under a democrat congress. Almost 3 times the deficit increase under the democrats during those 8 years. Under Obozo and a democrat congress in just 2010 the deficit rose 9% in just that one year alone. http://en.wikipedia.org/wiki/National_debt_by_U.S._presidential_terms
chatmandu002 posted at 12:09 pm on Fri, Aug 19, 2011.
vote for ABO (Anybody But Obama)
Dale Whiting posted at 2:57 pm on Fri, Aug 19, 2011.
So how did we end up with a deficite in 2008?
reddi27 posted at 3:20 pm on Fri, Aug 19, 2011.
Are you a billionaire? No? Ok, then I think I will trust Warren Buffett's opinion before I trust yours.
http://www.nytimes.com/2011/08/15/opinion/stop-coddling-the-super-rich.html
A_Rose_By_Any_Other_Name posted at 4:17 pm on Fri, Aug 19, 2011.
reddi27, you trust billionaires? If a billionaire told me it was in my best interest to jump, I would assume he or she stood to make a tidy profit no matter whether I jumped or just stood there, but you trust them?
Dale, is that a rhetorical question? You do mean deficit right? We keep ending up with deficits year after year because our government spends more money than it has to spend. It really is that simple. It's not a democrat or republican problem. They are both responsible for it. If you're talking about the growth of the national debt in 2008. Here's an article dated back to Sept 2008 that explains that year better than I could.
http://money.cnn.com/2008/09/09/news/economy/cbo_budget_update/index.htm
"Basically there was a substantial increase in spending and a halt in the growth of tax revenues. That drop in revenue is driven in part by an estimated 15% decline in corporate tax receipts. They fell as a result of lower corporate profits and tax rules governing how businesses depreciate their investments this year. A second factor is the rebates provided to tax filers from the economic stimulus law Congress passed earlier this year.
The spending hike is partly due to efforts by the government "to cover the insured deposits of insolvent financial institutions," the agency said.
To date, 11 banks have been seized by the FDIC this year - not a high number historically, but higher than it's been in recent years - and that number is expected to grow in the coming months."
We bailed out the banks after all those mortgages failed after we forced them to make bad loans to people who didn't qualify to get the loans. Anyway, that's the way I heard it.
A_Rose_By_Any_Other_Name posted at 4:32 pm on Fri, Aug 19, 2011.
Now Dale I hate to pound away at those wonderful democrats, but I think it's important to realize they had a strong desire to see more poor people owning their own homes. They figured that would help the country. Good old Barney Frank who is the former chairman of the House Financial Services Committee (2007–2011) had a great deal to do with this fiasco. Turns out it was a lot like pouring fertilizer on weeds, and then after they grew tall, pouring gas on them and torching them. Didn't do anything but make the banks richer and the people poorer and ballooning the national debt even further.