Help me with a RW meme: More tax receipts with the "lower

[rurallib]

tax rates" Sounds like bull shit to me, but I can't seem to find much on it. Help.
I must go away for a while but will check in later.

[liberal N proud]

1. Ask them to show you on paper how that works

I am sure it is the same fucked up principle as reagunomics - trickle down scheme. Which is what has the economy where it is today.

[Rosemary2205]

2. I read

the 2005 tax reciepts are a lower percentage of total GDP and adjusted for inflation are less but are a higher dollar amount than what was coming in in 2000.

Read links that referenced the government links to back it up but didn't save any. Look on the Treasury or GAO websites.


Have not seen how 2006 stacks up. Sorry.

[SharonAnn]

10. Hmm, larger population and a war = more costs. Larger $ amount but smaller percentage of GDP

may not cover costs.

If you provide certain services (security, judicial system, law enforcement, education) then you would recognize that costs for that go up as the population increases. Also could up additional amounts for increasingly insecure world, more education needed, etc. So, it stands to reason that costs go up.

If GDP goes up 10% but the tax revenues are a smaller percentage of that total GDP, they could still be higher $$ amount thatn before but still not be nearly enough to cover the increased costs.

[LeftyMom]

3. Ronnie Raygun tried it. It doesn't work.

See "supply-side economics" and "trickle down"

[TahitiNut]

4. It's a perversion of a perversion called "the Laffer Curve" ...

... which is nothing but pseudo-science loosely based on the (so-called) Law of Diminishing Returns. This was trotted out in the Eisenhower-Kennedy years to argue against a top tax rate of 90% on earned income, claiming that reducing that tax rate would stimulate investment and lead to greater employment and thereby increase tax revenues. To the small degree it was true then no longer applies. It's one thing to argue that with a top tax rate of 90% and quite another to make such a specious claim a top tax rate of 37%. In fact, unearned income is taxed at less than half that rate and there's nowhere to go but into the sewer of a banana republic with a plantation economy (taxing the workers but not the owners).

[POAS]

5. Carried to its illogical conclusion it would mean that

a zero tax rate would bring in the most money. It cannot work of course.

[Jim__]

7. Laffer's idea was a little better than that.

Laffer said that at a tax rate of 100% government receipts would be zero; and at a tax rate of 0% government receipts would be zero. Then, he conjectured that at some point between 0 and 100 you hit the optimal tax rate - the rate that would maximize government receipts. He also conjectured that the optimal tax rate was below the current tax rate. There is a certain truth to what he is saying. The difficulty is that gocvernment receipts are not a function of the tax rate. They are dependent on a plethora of economic variables. If you are given a specific tax rate, you cannot predict government receipts.

Martin Gardiner (sp) in his Scientific American column plotted government tax recipts against the tax rate for a number of years, and proved that given a specific tax rate, you get multiple values for government receipts.

The economy is much more complex than the Laffer Curve implies.

[POAS]

12. Of course it isn't as I stated it but

for many people trying to explain it in detailed terms will just lead them to zone out. Better to simplify it as much as possible to avoid overloading them. Most people just want their sound bite and damn the details.

[Jim__]

6. Some stats.

Here is a list of GDP stats by quarter: http://www.econstats.com/gdp/gdp__q1.htm.

Here is a list of tax receipts: http://www.econstats.com/treasury/deffy.csv.

Notice that tax receipts and GDP increase in most years, no matter what the tax rate. Our economy usually grows. Under bush, government spending has also grown astronomically. Increased government spending tends to increase GDP - the government is buying things - i.e increasing demand.

Ask the RWers what part of the increase in GDP (which actually causes the increase in government receipts) is due to government spending and what part is due to decreased tax rates, and ask them to document their analysis. I wish them luck.

[FormerDittoHead]

8. It's amazing what economic bump you'll get from borrowing a couple of trillion dollars...

The gov't will stimulate the economy if it borrows a lot of money and distributes it to military contractors.

Problem 1) the things were spending the money on will offer little long term gain, as opposed to education, scientific research, infrastructure, etc.

Problem 2) Republicans seem entirely resistant to the suggestion that the gov't should borrow money for education, infrastructure, etc.

I wouldn't mind the borrow and spend mentality so much if Republicans didn't lie trying to make us think it's tax cuts and that otherwise the government shouldn't borrow and spend money...

some more info:
http://www.evilliberal.com/numbers.html

[ThoughtCriminal]

9. Pretty sure they are including FICA withholding

but Federal Income tax receipts are down. They are making up the lost revenue by borrowing more from Social Security.



http://www.taxpolicycenter.org/budget/index.cfm

[DemGa]

11. Three-trillion in added debt

That's about one-third of the entire National debt.

The tax cuts, recession, and increases in outlays all contributed to record budget deficits during the Bush administration. The annual deficit reached record current-dollar levels of $374 billion in 2003 and $413 billion in 2004. National debt, the cumulative total of yearly deficits, rose from $5.7 trillion (58% of GDP) to $8.3 trillion (67% of GDP) under Bush...

http://en.wikipedia.org/wiki/Domestic_policy_of_the_George_W._Bush_administration#Spending