Obama XV: Now, with 20% more rage

[Red Cloud]

Re: Obama XV: Now, with 20% more rage

Don't worry, I know the answer: Clinton was somehow responsible for the 90's surpluses, but Bush was somehow not responsible for the increased tax revenue. All that's left for you is to explain why. Any takers?

Because, as blockski has clearly outlined for all you idiots, Bush's tax cuts certainly did not increase revenue. What are you going to believe, him, or those lying revenue figures from those Bush apologists at CBS News?

 

[ScoobyDoo]

Re: Obama XV: Now, with 20% more rage

Partially because people like Scooby say one thing and then vote another.

People like me, ay? I didn't vote for two wars and I didn't vote for Obama.

Try again.

 

[LynahFan]

Re: Obama XV: Now, with 20% more rage

Ok, but what's the Delta? If that $785 billion is less than the amount the taxes would have taken in, then it's still a net loser. Tax receipts is not the same as net revenue.

Read again - $785B WAS the delta.

 

[blockski]

Re: Obama XV: Now, with 20% more rage

Read again - $785B WAS the delta.

No, that's not what it said - that was the increase in receipts.

If I cut taxes that would have brought in 1,000 in revenue, the Gov't is out 1,000 bucks. But then, from that new baseline (which is what the article argues, since that time frame starts in 2004, the year after the last of Bush's tax cuts) revenues go up +750, the net difference is still -250.

The point is measuring the increased revenue from the year after the tax cuts fully went into effect is the wrong way to measure the entire change. If you want to capture the full impact of the change, it cannot be just revenue generated from a baseline of lower taxes, it has to be that revenue compared against what the higher tax rates would have generated.

 

[5mn_Major]

Re: Obama XV: Now, with 20% more rage

Because economic growth slowed in the early years of Bush's presidency? Call it a holdover from Clinton - I won't debate the point.

I don't know that I would pin that on Clinton. Coming into 2000, there was a ton of uncertainty. If you look at '92, there wasn't so much change...Bush I a relative moderate going to Clinton a southern Democrat. But in 2000, there was just a huge run up (largely valid as productivity skyrocketed and income did well during the 90s)...but now you had change from a relatively successful stalemated government...after 2000, the country was headed towards a total unknown conservative from a conservative part of the country with a conservative congress. Huge expected change in a relatively quiet period.

And the one thing that markets hate most is serious unknown. And a big markets spook can easily be enough to cause a slow down esp after the run up we had seen.

 

[blockski]

Re: Obama XV: Now, with 20% more rage

Ruth Marcus agrees - you can't measure at the bottom of the curve and say you've increased revenue.

http://voices.washingtonpost.com/postpartisan/2010/08/cherry-picking_season.html

Some readers have pointed out, entirely accurately, that the gross amount of tax revenue rose in the aftermath of the tax cuts, although there was some decline through 2004. The government took in $2 trillion in 2000; $2.6 trillion in 2007. (I’m using Riedl’s preferred high-point year here.) This increase barely keeps up with inflation.

More important, to get back to McConnell’s assertion about the absence of evidence that the tax cuts “actually diminished revenue,” the point is: compared to what? The only logical benchmark is whether the tax cuts diminished revenue compared to what they would have been in the absence of any change, and here the answer is indisputable: the tax cuts did their intended job of returning money to taxpayers. The government took in less than it would have otherwise.

This is the magic image that tells the tale, however:

http://modeledbehavior.com/2010/07/...eople-think-the-bush-tax-cuts-raised-revenue/

1. Data is from the Federal Reserve. It is seasonally adjusted quarterly real federal receipts.
2. The terrorist attacks, dot-com bubble etc, might explain a decline in the tax base what they don’t explain is why revenues never recover. (though more on that later)
3. Its particularly telling that after an adjustment the new revenue curve tracks the old revenue curve at a lower level. Precisely what one would expect if you were taking a smaller fraction of the same pot.

 

[LynahFan]

Re: Obama XV: Now, with 20% more rage

No, that's not what it said - that was the increase in receipts.

If I cut taxes that would have brought in 1,000 in revenue, the Gov't is out 1,000 bucks. But then, from that new baseline (which is what the article argues, since that time frame starts in 2004, the year after the last of Bush's tax cuts) revenues go up +750, the net difference is still -250.

Did you fail math? The +750 is ALREADY the net change with everything taken into acount - in 2004, revenue was X. In 2007, it was X+750. Is that so hard?

The point is measuring the increased revenue from the year after the tax cuts fully went into effect is the wrong way to measure the entire change. If you want to capture the full impact of the change, it cannot be just revenue generated from a baseline of lower taxes, it has to be that revenue compared against what the higher tax rates would have generated.

Then maybe Clinton's performance should have been judged against what a Republican president "would have done" if he'd been in office in that time period, too? Oh, wait - we have absolutely no way to know what that would have been. Never mind.

 

[blockski]

Re: Obama XV: Now, with 20% more rage

Did you fail math? The +750 is ALREADY the net change with everything taken into acount - in 2004, revenue was X. In 2007, it was X+750. Is that so hard?

No, it's not hard. I follow you completely. The point is that measuring from 2004 on (after taxes have already been cut) doesn't tell you what the actual impact of cutting taxes was in 2001 and 2003 - it just tells you what happened afterwards.

The graph I posted in the post above shows it better than I can say it.

This is how it went:

2001: X+1000
Tax Cuts
2004: X
Revenue Growth
2007: X+750

We're still short.

 

[LynahFan]

Re: Obama XV: Now, with 20% more rage

No, it's not hard. I follow you completely. The point is that measuring from 2004 on (after taxes have already been cut) doesn't tell you what the actual impact of cutting taxes was in 2001 and 2003 - it just tells you what happened afterwards.

The graph I posted in the post above shows it better than I can say it.

This is how it went:

2001: X+1000
Tax Cuts
2004: X
Revenue Growth
2007: X+750

We're still short.

Must be some of that new math - sure looks to me like the end of the green line (2007) is higher than the end of the bright blue line (2001).

The dark blue line is completely irrelevant - that was NEVER going to happen, regardless of who was president or what taxes were or weren't cut. That's extrapolated based on the unsustainable growth rates of the late 1990s, and would be and absolutely disingenuous benchmark to measure against. Oh, wait...

 

[blockski]

Re: Obama XV: Now, with 20% more rage

Must be some of that new math - sure looks to me like the end of the green line (2007) is higher than the end of the bright blue line (2001).

The dark blue line is completely irrelevant - that was NEVER going to happen, regardless of who was president or what taxes were or weren't cut. That's extrapolated based on the unsustainable growth rates of the late 1990s, and would be and absolutely disingenuous benchmark to measure against. Oh, wait...

So, the best you have on the claim that tax cuts increased revenues is that they increased revenues in 2007, but only after losing lots of revenue from 2001-2007. Ok.

And no, the dark blue line is quite relevant. Would revenues tracked that exactly? No, but they would have been a lot closer to that in 2007 than the green line. From the link:

However, the issue here is that suppose the Bush tax cuts had no effect at all on long term revenue. For example, increases in tax rates were exactly balanced by increases in GDP or decreases in tax avoidance.

So then we might think the decline in revenues was caused by Sep 11th or the Dot-Com burst. In that case we would expect to see a drop in revenues followed by a return to trend as the economy recovers. At a minimum we should expect post dip revenue to grow faster as the economy tries to return to trend.

We don’t see that. We see a permanently lower trend.

Given that this is exactly what you would expect from reducing the percentage of the economy which taxed, I think its pretty strong evidence that this is what happened.

In short, the claim that the Bush tax cuts had such strong secondary effects of boosting GDP and tax compliance that they outweighed the primary effect of reducing taxable income is a complex one. Generally, in science we would expect someone to assemble a strong empirical case for such a claim.

When the empirics match the much simpler, more basic, more parsimonious explanation, that’s pretty ****ing for the complex claim.

 

[LynahFan]

Re: Obama XV: Now, with 20% more rage

So, the best you have on the claim that tax cuts increased revenues is that they increased revenues in 2007, but only after losing lots of revenue from 2001-2007. Ok.

And the best that you can claim is that revenues were lower than they MIGHT have been if absolutely everything in the economy stayed on the same trends that they were in 2000.

I guess you win.

 

[blockski]

Re: Obama XV: Now, with 20% more rage

But this is what I don't get - the entire political premise for the tax cuts was to return the money to the people. Ok, got it. The graph clearly shows that happened - the feds get a smaller chunk of the pie.

Then they turn around and argue that no, it wasn't really a smaller piece of the pie - it was a larger piece of the pie.

I'll give MinnFan credit for actually cutting through the BS and saying he wants to lower taxes for the sake of lowering taxes. I disagree, but hey - at least that's better than the intellectual gymnastics to make it seem like there isn't an actual impact on the government's bottom line - or worse yet, a positive impact.

 

[MinnFan]

Re: Obama XV: Now, with 20% more rage

I'll give MinnFan credit for actually cutting through the BS and saying he wants to lower taxes for the sake of lowering taxes. I disagree, but hey - at least that's better than the intellectual gymnastics to make it seem like there isn't an actual impact on the government's bottom line - or worse yet, a positive impact.

And just for the record I'm not even saying that they should be lowered right now. There are a few things that could be cut now (i.e. capital gains) but most of it should be a goal for the future. The immediate aim should be to drastically cut the budget.

 

[LynahFan]

Re: Obama XV: Now, with 20% more rage

But this is what I don't get - the entire political premise for the tax cuts was to return the money to the people. Ok, got it. The graph clearly shows that happened - the feds get a smaller chunk of the pie.

Then they turn around and argue that no, it wasn't really a smaller piece of the pie - it was a larger piece of the pie.

If tax rates go down, then the government gets a smaller piece of the pie, no matter what. That's pretty much what a tax rate is: the percentage of the pie that the government is taking.

 

[huskyfan]

Re: Obama XV: Now, with 20% more rage

(sigh)

have any of you ever run a business? or read an economic textbook? taken an economics class?

if you have you would understand how TAX CUTS work.

 

[5mn_Major]

Re: Obama XV: Now, with 20% more rage

(sigh)

have any of you ever run a business? or read an economic textbook? taken an economics class?

if you have you would understand how TAX CUTS work.

I don't think anyone is denying that tax cuts directly cut revenue. What's in question is whether tax cuts increase ultimately help companies and the affluent and that that turns (quite counterintuitively) into actual gains in revenues due to increased outputs and spending. The theory of supply side economics. That indirectly govt revenue gains due to improved business activity overcome govt revenue loss due to tax cuts.

Frankly I think that tax cuts biggest benefit is very intangible...that people have a better quality of life knowing they have extra cash within there sphere of decisionmaking. But again in this economy that's not resulting in spending...which is what this country desperately needs.

 

[amherstblackbear]

Re: Obama XV: Now, with 20% more rage

The dark blue line is completely irrelevant - that was NEVER going to happen, regardless of who was president or what taxes were or weren't cut. That's extrapolated based on the unsustainable growth rates of the late 1990s, and would be and absolutely disingenuous benchmark to measure against. Oh, wait...

More likely it's extrapolated by barefoot empiricism. There is a long-term upward trend in government revenue. Even in the rare cases when revenue declines from t to t+t, revenue recovers such that t+2 > t.

edit: ah, my data are in nominal dollars. That accounts for the the difference between what I'm looking at and blockski's chart.

Still, taking just one example:

Revenue
1982: 618b
1983: 601b
1984: 667b

618b in 1982 deflates to 666b in 1984 dollars.

I still find the idea that real revenue (the light blue line) would fall off the table after 2001 to be implausible - the long-run trend is so strong.

 

[Red Cloud]

Re: Obama XV: Now, with 20% more rage

If tax rates go down, then the government gets a smaller piece of the pie, no matter what. That's pretty much what a tax rate is: the percentage of the pie that the government is taking.

And what blockski is failing to understand is that when people can keep a bigger percentage of the pie, what can happen is that the people make the pie bigger (through economic growth and activity) - which means that even though the government is getting less of the pie as a percent of the whole, they're getting more pie than they were before.

Mmmm, pie.

 

[blockski]

Re: Obama XV: Now, with 20% more rage

And what blockski is failing to understand is that when people can keep a bigger percentage of the pie, what can happen is that the people make the pie bigger (through economic growth and activity) - which means that even though the government is getting less of the pie as a percent of the whole, they're getting more pie than they were before.

Mmmm, pie.

Except that the data supports the fact that they make the pie bigger at slightly higher marginal tax rates, too.

Being that the Laffer curve is a theoretical instrument, there is nevertheless a lot of research that argues the peak in the US is at 70%. We're no where near that.

 

[Sloe Gin]

Re: Obama XV: Now, with 20% more rage

Mmmm, pie.

what kind of pie?