Republican Theology of Tax Cuts

[Henry Hawk]

What I find amazing is exactly what you guys are amazed about, but for the opposite reasons.

I have provided information that 100% supports tax cuts, with facts and numbers to support it.  More importantly, we all have lived throught these times and saw first hand exactly how tax cuts HELPED this nation.  There was no LIE involved with the economic recoveries of the Kennedy era, the Reagan era and the George W era........Tax cuts was put into place and we had a recovery...............it was/is that simple.

Now, other political moves such as oversight on Fannie Mae was mishandled, NAFTA was mishandled and other issues come into play that ended economic growth....but this crap that raising taxes is going to help an economy of a Country that is CLEARLY over spending is, INDEED, diabolically unclever.

[Exterminator]

You are delusional...enjoy your little make-believe world.   

[Henry Hawk]

This is not my writing, but it is an excellent explanation of how tax cuts work:

According to October 11, 2006 news reports, the Federal deficit (the amount by which government spending exceeds tax and other government revenues) has shrunk to its lowest amount in four years. In addition to being good news, it also showed that the tax cuts implemented by the Bush administration are working.


The tax cuts are working in that they are generating more revenue than before they were cut. Why does cutting taxes result in MORE tax money being collected? The short answer is that by reducing tax rates (the percent of tax collected on each dollar of income) the government encourages people to work and earn more. Just as a business will often opt to reduce the price of its goods in order to increase the amount sold, the government is basically reducing the cost of working and thereby encouraging people to work and earn more. While it takes less in taxes on each dollar taxpayers earn, it collects the smaller amount from a much larger base of income thereby raking in a larger amount of tax dollars from a larger volume of taxable income.


The longer explanation has to do with the progressive nature of our tax system. Our Federal income tax has a series of rates rather than one rate. Basically, what the government does is set a schedule of tax brackets, say $1 -$20,000 worth of income is taxed at 10%; 20,001 - $30,000 at 20%; and $30,001 and above at 50%. In this scenario , everyone, from the poorest to the richest taxpayer pays 10% of the first $20,000 worth of income. A wealthy person earning $100,000 per year pays 10% of the first $20,000 she earns while the high school student with a part-time job earning $10,000 pays 10% of his income. While the high school student just pays his $1,000 in taxes (10% of $10,000); the wealthy person also has to pay 20% or $2,000 on the income earned between $20,001 and $30,000 and another $35,000 in taxes on the income between $30,001 and $100,000 (50% of the remaining $70,000 of income).


By reducing the top bracket rates, the government provides more incentive to work (prior to Ronald Regan, the top rate in the U.S. was about 90%, while in England the top rate at that time was something like 101% which resulted in the taxes on the income in the last bracket being more than the amount earned). Once a person earns enough to pay their basic living expenses (food, clothing and shelter) they can afford to choose between work and leisure. The higher the marginal tax rates (the taxes on the marginal or last amount of income earned) the less incentive one has to work. The idea behind the high rates is that the high marginal rates apply only to rich people who can afford the taxes because it does not deprive them of the money needed for life's basic needs. This is true, However, since they have already earned enough in the lower brackets to pay for their basic needs, they now have a choice between working all day and having the government tax most of the recent income away or quit work for the rest of the year and play golf. When people stop working, they stop stop producing (meaning there are fewer goods being produced for the rest of us to buy) but they are also not making any money that the government can tax. If the tax on income in excess of, say $30,000 is 90% and people stop working as soon as their income for the year reaches $29,999 then the government gets to collect taxes at the rate of 90% of nothing.


Most of us can't stop working when our income reaches a certain figure. However, higher income people are often professionals who have some control over the hours they work. Thus, people like doctors, lawyers, stockbrokers, etc. can usually control their hours and cut back as their income rises. Former President Regan himself experienced this while he was an actor. As a star actor he was in a position to accept or reject a script. He calculated that making five pictures per year put his income just below the highest bracket. So, if he did a sixth picture, most of the income would go to Uncle Sam. As a result he limited himself to 5 pictures per year and spent more time with his family. With other actors doing the same, the public had fewer shows to watch. However, this did not stop with star actors working less and the public making do with fewer new movies. With fewer shows being made, there was less work for lower paid actors who were below the star level as well as all the other behind the scenes people who help to make a movie. Not only did the government lose taxes on the extra money that the star actors would have made if they had not voluntarily left the workforce but it also lost the taxes the larger group of lower paid actors and other workers would have made if they had not been laid off involuntarily due to lack of work.



While people making lower incomes usually cannot temporarily stop working on their regular job in order to avoid being pushed into a high rate tax bracket, they can keep their income down by turning down extra work. The factory worker who accepts less overtime because additional overtime will throw him into a higher tax bracket. The person working a part-time job in addition to their full time job who quits the part-time job because most of it goes to taxes. Finally, the working spouse. In many cases one spouse, due to education and experience, will have a considerably higher income than the other spouse. With high marginal taxes, couples in this situation will find that the income from the lower income spouse is not worth the effort because most of it goes to taxes. How is this so? Well, for most households income taxes are calculated on the combined incomes of the husband and wife. Let's assume a 90% tax on incomes in excess of $40,000 and assume that the husband earns $39,999 and the wife earns $20,000. With a 90% tax the $20,000 being brought in by the wife works out to an additional income for the household of $2,000 because $18,000 of her income is taxed away. Unless the husband is able to cut his hours and reduce his income by $20,000 to keep the household income at $39,999 it does not make sense for the wife to continue working.


By reducing high marginal tax rates more people have the incentive or opportunity to work and more people have the incentive to work longer hours and this not only generates more goods and services but a much larger income base on which to levy taxes.


So, why do deficits increase every time the government cuts taxes? While reductions in tax rates begin immediately, which causes a temporary drop in government revenues, the adjustment process takes a while as people slowly realize that their paychecks are suddenly larger and could be even larger if they worked more. Along with this realization process, there is also a lag between people deciding to work more and actually finding that work. The other, more important, reason why deficits initially balloon when taxes are cut is that Congress not only refuses to cut spending but continues increasing spending.

[Exterminator]

This is nothing more than tripe from someone as misinformed as you are.  There is zero factual basis for this article which is precisely why the (unknown) author doesn't cite any sources.  The problem with people like you is that you lack critical thinking and analytical skills.  Your goal is never to actually learn anything but to reinforce what you already believe.  It's like a big mental-midget circle jerk.

The numbers do not support any of your assertions, period.

[Exterminator]

[The Troll]

This is nothing more than tripe from someone as misinformed as you are.  There is zero factual basis for this article which is precisely why the (unknown) author doesn't cite any sources.  The problem with people like you is that you lack critical thinking and analytical skills.  Your goal is never to actually learn anything but to reinforce what you already believe.  It's like a big mental-midget circle jerk.

The numbers do not support any of your assertions, period.

    Amen Brother Exterminator, you sure hit the nut on the head. 

[Exterminator]

I'm sure that Henry won't read it but here is a report prepared by the CBO in 2003 under the direction of a supply-side economist hand picked by the White House.  It concludes that in no way would Bush's tax cuts come close to paying for themselves over their 10 year life-span:

http://www.dlc.org/documents/03-25-AnalysisPresidentBudget-Final.pdf

Tax cuts can not and do not pay for themselves; in fact, they have, in every case in the past 30 years, resulted in increased deficits.

[Henry Hawk]

Ex, there is a big difference between Tax Cuts and spending....THAT is what happened under Reagan to produce those charts you got from a Berkley Professor, who has his own z-facts, liberal web-site.  THAT does not sound like critical thinking or using your analytical skills, but rather parroting MORE liberal trash............imo.

Why is it then when the top 1 percent of the tax payers saw their share of the income tax bill climb even more dramatically, from 17.6 percent in 1981 to 27.5 percent in 1988, during that time frame you are talking about.....

the RICH paid MORE taxes by cutting them....and the federal revenue GREW.....we screwed up by allowing congress to spend, spend, spend....Reagan let the dem controlled house do it, to accomplish his goals of stomping out the cold war....

facts are, unemployment grows when we do NOT raise taxes.....fact is NOW is not a good time to increase ANY taxes, while we have nearly 10% unemployed.....

the numbers actually DO support all of my assertions.....PERIOD!

[Henry Hawk]

Tax cuts can not and do not pay for themselves; in fact, they have, in every case in the past 30 years, resulted in increased deficits.

THAT IS BECAUSE OF THE OUT OF CONTROL SPENDING ... NOT BECAUSE OF TAX CUTS.

We have got to couple Tax Cuts along with Spending Cuts.........THEN, and only then will we restore our economy to where it should be.

[Exterminator]

"Greg Mankiw, chairman of the Council of Economic Advisers under George W. Bush, has responded to the view that broad-based tax cuts would pay for themselves, as follows: 'I did not find such a claim credible, based on the available evidence. I never have, and I still don't.' Indeed, he has referred to those who believe this as 'charlatans and cranks'."

[Exterminator]

Google "Dynamic Scoring Finally Ends Debate On Taxes, Revenue" and learn something.  You've been sold a bill of goods, to wit, that you can have your cake and eat it too.  It is a lie and a sham to garner votes from gullible people looking for a free lunch.

[Palehorse]

One of the gravest dangers to the survival of our republic is an ignorant electorate routinely feeding at the trough of propaganda.   -- Locutus

Indeed. And their addiction to it is ponderous!

[Henry Hawk]

Google "Dynamic Scoring Finally Ends Debate On Taxes, Revenue" and learn something.  You've been sold a bill of goods, to wit, that you can have your cake and eat it too.  It is a lie and a sham to garner votes from gullible people looking for a free lunch.

Ex, the bottom line to ALL of this is...........we spend too much money.  Raising Taxes to pay for way too many things that is NOT the governments responsiblity in the first place.  Where exactly do you think our taxes should be?  How much should the tax payers be paying?

Ex, I am asking YOU this question, what role is it of our government to decide how much money they get to take away from hard working people and "give" it away to others?  Is that in our constitution? 

Palehorse, everything that I have discussed regarding tax cuts, is not a propaganda bill of goods.  It is simple math and common sense.  What IS propaganda, is OUR Government spending nearly a $trillion$ in one year, and telling the people it is going to stimulate this economy!  That speaks volume of the ignorant electorant.  Those who believe that our government is here to fix our problems.  They want MORE revenue, to pass out MORE entitlement programs, and pad their own personal beings so they can live a luxorous lifestyle.  You bitch at Coporate America, and yet think that those in Washington know better on how we should invest our money, and live our lives.

I have accepted being referred to as ignorant on here by you guys for years now.  Only because I really do know better.  I find it bothersome how arrogant those on the left are, with their pompous beliefs, and are the first to criticize those that does not match up with theirs. 

Guys, I have done a remarkable amount of research and reading regarding this economy.  Despite what some say, that I am delusional,  that I lack critical thinking and analytical skills because I don't buy into the information THEY think is the Gospel.

I can confidently stand on my principals.....principals that are supported by millions of others who ARE proven analytical and critical thinkers.  I could walk away from here, and nothing will be lost or missed by any member.  You guys have challanged me beyond my beliefs, but yet, I still have only managed to grow on what I knew was correct in the first place.  There are some on here who have no desire to even try to learn, and are first to start with childish name-calling.  I fell into that once, and will not return to that.

Done rambling, but will confidently not back down from this stance.  Raising taxes will only HARM this economy.

[Exterminator]

Done rambling, but will confidently not back down from this stance.

I can only lead a horse to water...people like you are the only ones who still believe in supply-side (voodoo) economics.  The rest of the world knows it was nothing more than a (very effective) political ploy that has become a joke, much like those who still cling to it despite overwhelming empirical evidence to the contrary.

[Henry Hawk]

I can only lead a horse to water...people like you are the only ones who still believe in supply-side (voodoo) economics.  The rest of the world knows it was nothing more than a (very effective) political ploy that has become a joke, much like those who still cling to it despite overwhelming empirical evidence to the contrary.

Let me break this down:

Lower Taxes = more Jobs

Higher Taxes = more Government

nuff said!