posted on June 13, 2007 09:17:20 PM new
WE HAVE TO GET THE TAXES RAISED ... AND FAST!
Class warlords and those suffering from wealth envy might not want to hear this, but our federal budget deficit is shrinking. The deficit through May of 2007 is down 34.6 percent from the same period a year ago, now totaling about $148.5 billion.
Why? Prosperity, that's why. Incomes are up. Corporate profits are up. Unemployment is down. Much of this is driven by tax cuts. That's right ... tax cuts. It's all very simple, really. You allow people to keep more of what they earn, and they will do more to earn more. It's a lesson as old as civilization.
You get more of the behavior you reward, and you get less of the behavior you punish. Most (but certainly not all) parents recognize this. The more you penalize hard word with high taxes, the less hard work you will get. The more you reward achievement and hard work the more work you'll get. More work = growing economy = more government revenue = lower deficits. If, that is, the government doesn't increase spending faster than the revenue increases.
In the midst of this good news, just what are our friends in the Democrat Party proposing? You guessed it; more taxes.
They want to punish this hard work that's going on out there with higher taxes on the higher achievers. The goal here is not to increase government revenues. Even Democrats are smarter than that. They realize that these higher taxes they're talking about will likely slow down our economic growth. Their real goal is power, and power comes from the ballot box. They know that a huge segment of their voting base wallows in envy every single day of their lives; envy of the wealth accumulated by those who have worked harder and smarter than they. They want these people punished ... NOW! And they believe that the best way to punish these high-achievers is to take away more of that which they are working for; their wealth.
Wealth envy is nothing new. In fact, we can thank wealth envy for our current income tax system. When the 16th Amendment (income tax) was being sold to the American people the proponents of a new federal income tax needed a way to get people to ask their states for ratification. Wealth envy was the key.
The people were told that only rich Americans would ever have to pay the income tax, and virtually all of these rich people lived in the Northeast; generally in Massachusetts, Connecticut, Pennsylvania and New York. The voters in states like Michigan or Kentucky had nothing to worry about. They would reap the benefits of all of this new federal spending without having to pay a part of the tab. Only the evil rich would be hit. The 16th Amendment sailed through.
How far will people go to hurt someone that has more than they? They'll even go to the point of hurting themselves -- quite willingly -- in the process.
Some years ago researchers gathered a cross section of Americans together to play a game. They were each given a set amount of play money. Some were given more than others. The subjects were then allowed to play an investing game. At the end of the game some had acquired more "wealth," while others had lost.
Those with less wealth were then approached and asked if they would like to "burn" some of the dollars earned by the winners in this investing game. They were told that for each dollar they were willing to give away, four dollars would be taken from a rich person. They would get absolutely nothing for their dollar except the pleasure of knowing that one of the "winners" was having money taken from them.
To nobody's surprise, most of those with the fewer dollars elected to throw away some of their money just for the joy of knowing that one of the "winners" was getting nailed.
And so it goes with our economy. You could tell your typical lower-income Democrat voter that if taxes are raised on the evil rich it might slow down our economy. You could tell them that a slowing economy and lower corporate profits might mean fewer pay raises. You could tell them that an economic slowdown brought on by higher taxes might mean fewer job opportunities. You can tell them all of the negative consequences of increasing taxes on the high-achievers, and it won't make a difference. They are perfectly willing to take a hit if they just know that those nasty rich people are taking it in the chin.
Democrats are well aware of the dynamics of wealth envy and voting. They give the voters what they want -- punishment for the wealthy -- and the voters will respond with their votes, even if it hurts them to do so.
Nope not looking forward to dems raising our taxes again, especially when our deficit is being reduced quite nicely BECAUSE of the tax cuts and more consumers spending their OWN money.
Liberals can't have that. THEY know better how to spend OUR money. They're the adults - we're the children. According to the liberal leaders mind think.
What is real median income? It is an inflation adjusted measure which indicates the income amount that divides US families at their midpoint.
Absolute faith has been shown, consistently, to breed intolerance. And intolerance, history teaches us, again and again, begets violence.
---------------------------------- The duty of a patriot in this time and place is to ask questions, to demand answers, to understand where our nation is headed and why. If the answers you get do not suit you, or if they frighten you, or if they anger you, it is your duty as a patriot to dissent. Freedom does not begin with blind acceptance and with a flag. Freedom begins when you say 'No.'
The US Census Bureau released new figures on the economic health and well being of Americans on August 29th in its annual report. Below I summarize some of the important aspects of this report. To view this report: www.census.gov/prod/2006pubs/p60-231.pdf
1. Real median household income rose 1.1% in 2005 to $46,326. Real median income is an inflation adjusted measure which indicates the income amount that divides US families at their midpoint, with one half of families earning less than $46,326, and one half of families earning greater than that amount.
2. Although real median household income rose last year, the rise was not sufficient to overcome the impact of the recession that ushered in the 21st century in the US. Real median family incomes in the US in 2005 remained 0.5% lower than real median family incomes in 2001.
3. Real median income values, however, provide a misleading indicator of how widely US citizens share in recent economic gains. For example, while real median family income increased, so too did economic inequality. Economic inequality is evident in several additional indicators.
4. Median family incomes vary significantly by race. The 3 year moving average for families of different racial and ethnic backgrounds were reported as follows: Whites, Non-Hispanic ($50,784); African Americans ($30,858); Hispanics ($35,967); Asians ($61,094).
5. In 2005, the poorest 20% of families earned only 3.4 % of all household income. The top 20% of families earned 50.4% of all household incomes. Clearly, this indicates a wide disparity in the distribution of income.
6. For the top 20% of households, average incomes rose by 2 percent, and the mean annual income for this group of families is now $ 159, 583.
7. Mean income for the bottom 20% rose at a lower rate of 0.6%. The mean family income for those in the lowest 20% of household incomes rose by only $68 to $10,587.
8. The report indicated that the GINI coefficient of income inequality rose to 0.469 in 2005. The higher the GINI coefficient, the more unequal the distribution of income. The 2005 GINI is the largest inequality figure recorded by the US Census Bureau in the 40 years it has issued annual reports.
9. The small rise in income for the lowest 20% of income earning families helped reduce the proportion of the population that lives in poverty by 0.1% (to 12.6%). The 2005 poverty rate, however, was 1.3 points higher than the 2001 poverty rate (11.3%), which indicated that the poorest Americans have had much more difficulty recovering from the early 21st century recession. Today, 36.85 million Americans still live in poverty.
10. Despite the rise in median family income, the median income for both men and women declined. Men’s median income fell by 1.8% to $ 41,386, while women’s median incomes fell 1.3% to $ 31,858. On average, women still earn significantly less than men (77 cents for every dollar earned by men). It should be noted that the rise in the male/female wage level that has occurred since the mid-1980s is largely the result of men’s wages falling relative to women’s wages, and not the result of a real gain in women’s wages relative to men’s wages. Also, the discrepancy between the decline in individual wages (women/men) versus the rise in family income is the result of income generated from investments for families.
11. According to US Census Bureau documents (http://www.census.gov/hhes/poverty/threshld/thresh04.html), poverty thresholds are as follows: for persons under age 65 ($9,827/yr); for persons over age 65 ($ 9,060/yr); for a family of 4 ($19,484) (for other family sizes, use link). It should be noted that the poverty level value set by the US Census Bureau for individuals under age 65 is slightly less ($885) than a person who earns minimum wage ($ 5.15/hour) would make working 40 hours a week for 52 weeks.
12. There are important racial differences in poverty that need to be considered. During 2005, the poverty rate for Whites declined slightly (0.1%), to 10.5%. The African American poverty rate remained constant, though they continue to be adversely affected, and the proportion of African Americans who live in poverty was 24.7%. Like the White poverty rates, the Hispanic poverty rate fell by 0.1%. However, like the African American poverty rate, the Hispanics poverty rate remains significantly higher than the White poverty rate at 21.8%.
13. Poverty rates for other groups also rose. For female headed households, the poverty rate rose by 0.6 points to 31.1%. Likewise, the poverty rate for those over 65 rose by 0.3 points to 10.1%. Poverty rates for children, however, fell by 0.2 points to 17.6%.
14. The number of Americans without health insurance increased to 46.6 million, or by 1.3 million people during 2005.
15. Important regional variations exist in reported family income patterns. The rise in incomes was above the national average in Northeastern States (2.9%) and in Westerns States (1.5%), and below the national average in Midwestern (-0.4%) and Southern (0.1%) states.
Absolute faith has been shown, consistently, to breed intolerance. And intolerance, history teaches us, again and again, begets violence.
---------------------------------- The duty of a patriot in this time and place is to ask questions, to demand answers, to understand where our nation is headed and why. If the answers you get do not suit you, or if they frighten you, or if they anger you, it is your duty as a patriot to dissent. Freedom does not begin with blind acceptance and with a flag. Freedom begins when you say 'No.'
posted on June 13, 2007 10:13:08 PM new
And for THOSE reasons, the liberals are RIGHT to want to raise our taxes? LOL Not in MY world.
====
"When you look at real median income. The numbers do not look good."
Median income is deceptive. As the more poor illegals we have in our nation...the more their numbers distort the totals.
AND more American's are moving UP in income...more becoming what the ENVY-ridden liberals whine about.....more are becoming RICH.
But the liberals will continue using this 'poor' envy and talking about those terrible rich people.....who's only crime is they used the advantages they have here in our Nation....and actually MADE something of themselves. lol
Using this area to divide, just like they do EVERY time the SS discussion is started. They go on and on trying to make the elderly worry the BIG BAD republicans are going to take away their benefits. LOL
They're out of touch with reality. Even JFK KNEW cutting taxes made the economy do much better. Raising taxes causes job losses, less productivity and a slower economy.
They PROMISE to raise your taxes....vote for them if you think you're struggling NOW....just wait until you're paying MORE taxes. LOL LOL What a weird thought process to what will make their individual pocket books more empty than they are now.
And the odd thing is they SUPPORT it wholeheartedly. :-S Now THAT'S weird.
~American's who WANT to pay more taxes.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
"While the democratic party complains about everything THIS President does to protect our Nation": "What would a Democrat president have done at that point?"
"Apparently, the answer is: Sit back and wait for the next terrorist attack."
posted on June 14, 2007 03:47:13 AM newMedian income is deceptive
But just looking at income is not. Income has been rising every year Linda. Just because your income is up doesn't make a person better off.
You need to study economics more, because you are living in that fantasy world again Linda.
So how much did your income go up over last year? Was that increase big enough to offset the rise in the cost of gasoline prices and utilities?
Absolute faith has been shown, consistently, to breed intolerance. And intolerance, history teaches us, again and again, begets violence.
---------------------------------- The duty of a patriot in this time and place is to ask questions, to demand answers, to understand where our nation is headed and why. If the answers you get do not suit you, or if they frighten you, or if they anger you, it is your duty as a patriot to dissent. Freedom does not begin with blind acceptance and with a flag. Freedom begins when you say 'No.'
posted on June 14, 2007 06:26:06 AM newMuch of this is driven by tax cuts. That's right ... tax cuts. It's all very simple, really. You allow people to keep more of what they earn, and they will do more to earn more. It's a lesson as old as civilization.
The nation faces increasingly serious budget problems. Rather than address them, however, the President’s budget would make the problems worse. The net result of the President’s proposals would be to make deficits considerably larger than they would be without the proposals, further risking the long-term health of the economy and saddling future generations with even greater amounts of debt.
The proposals in the budget that seek to contain deficits are limited in scope and are heavily outweighed by the deficit-increasing proposals. Furthermore, the deficit-reducing proposals are disproportionately tilted against lower- and middle-income families, while giving more affluent and powerful constituents a virtual free ride.
The following elements of the budget stand out.
Tax cuts, especially for the most well-off, emerge as the Administration’s highest priority. The most striking feature of the budget is the Administration’s penchant for ever more tax cuts. This is so even though the budget itself projects that federal revenues in 2004 will be at their lowest level since 1950, measured as a share of the economy, and even though the budget data show the decline in revenues accounts for three-fourths of the unprecedented fiscal deterioration since 2000. (See table on page 9.)
New budget rules that favor powerful interests. The Administration proposes new budget rules that would impose fiscal discipline on entitlement programs for middle- and low-income families but impose no discipline on new tax breaks for high-income families and corporations.
The budget won’t cut the deficit in half. The Administration attempts to wrap the budget in an aura of fiscal responsibility by claiming it will cut the deficit in half in five years. This claim is not credible. The budget uses a series of stratagems to mask the magnitude of the deficits the nation faces (and the degree to which the budget would make the deficits worse) and to make it appear on paper as though the deficit will be cut in half. The budget omits approximately $160 billion in costs in 2009 — the fifth year — that the Administration itself favors and is expected to propose in future budgets.
The budget obscures the long-term deficits. By showing deficit numbers for only a five-year period, the budget conceals the marked worsening of the deficit expected under Administration policies in the second half of the coming decade. The bulk of the cost of making the 2001 and 2003 tax cuts permanent would occur after 2010, when most of these tax cuts are scheduled to expire. That also is the period when Social Security and Medicare costs would begin to rise more rapidly as a result of the baby boomers’ retirement.
Disproportionate emphasis on reducing domestic discretionary programs. The Administration singles out one relatively small part of the budget for tough treatment — domestic discretionary programs outside homeland security. These programs, which have had little to do with the recent rise in the deficit and are below historic average levels, measured as a share of the economy,[1] would increase only 0.1 percent in 2005. (The often-cited 0.5 percent figure applies to a broader category of programs that includes international programs and defense programs outside the Pentagon.) This represents a small cut when inflation is taken into account. This part of the budget would then be cut significantly deeper starting in 2006, with the cuts widening with each passing year. Indeed, starting in 2006, the large majority of domestic discretionary programs outside homeland security would be reduced. Even programs that the Administration boasts it is expanding, based on its fiscal year 2005 funding request — programs such as Title I education, the National Institute of Health, the Supplemental Food Program for Women, Infants, and Children (WIC), and low-income energy assistance — would be cut starting in 2006.[2] By 2009, the budget proposes to cut overall funding for domestic discretionary programs outside homeland security $45.4 billion — or 10.4 percent — below today’s level, adjusted for inflation. The Administration is proposing five-year binding caps on discretionary spending to lock in cuts of this magnitude.
A number of these cuts would cause significant hardship. For example, the low funding level proposed in 2005 for the housing voucher program, the nation’s principal low-income housing assistance program, could cause the number of low-income families and elderly and disabled households receiving such assistance to be cut by 250,000. The funding levels proposed for child care programs would cause the number of children from low- and moderate-income working families who receive child care assistance to be reduced by approximately 365,000 by 2009.
Yet the amount that these cuts would save pales in comparison to the revenue losses from the tax cuts. The savings over the next five years from all of the domestic discretionary cuts combined would be substantially less than the cost of the tax cuts just for the one percent of households with the highest incomes.
The budget consistently favors the well-to-do over low- and moderate-income working Americans. The favoritism toward those with high incomes is evident in the new budget rules the Administration is proposing, in the singling out of domestic discretionary programs for cuts, and in the nature of the Administration’s tax cuts. It also is evident in less obvious ways. For example, the budget proposes to make permanent every tax-cut provision enacted in 2001 and 2003 that predominately benefits people with high incomes. These include tax cuts that make already generous pension and retirement tax breaks still more generous for wealthy business owners and executives. But the budget fails to extend — and thus would let die after 2006 — the provision of the 2001 tax-cut law that encourages greater retirement savings by working families with incomes under $50,000. (That provision, known as the Savers’ Credit, provides a tax credit that partially matches contributions made by such families to pension or retirement accounts.) This omission is reminiscent of the Administration’s tax-cut proposal last year, which accelerated tax cuts enacted in 2001 for higher-income households but not a tax benefit for low-income working families with children, and which accelerated “marriage-penalty relief” tax cuts for higher-income married couples but not for low-income married couples.
Absolute faith has been shown, consistently, to breed intolerance. And intolerance, history teaches us, again and again, begets violence.
---------------------------------- The duty of a patriot in this time and place is to ask questions, to demand answers, to understand where our nation is headed and why. If the answers you get do not suit you, or if they frighten you, or if they anger you, it is your duty as a patriot to dissent. Freedom does not begin with blind acceptance and with a flag. Freedom begins when you say 'No.'
posted on June 14, 2007 06:33:43 AM new
Dynamic Analysis
By Robert Carroll and N. Gregory Mankiw
Does tax relief mean more economic growth? Many people believe the answer is yes, and now they get strong support from the staff of the U.S. Treasury.
Most press reports on the Mid-Session Review of the federal budget, released by the Bush administration a couple of weeks ago, focused on the good news about expanding tax revenues and the shrinking budget deficit. But for tax-policy geeks, the most intriguing part of the report was an easily overlooked box on page 3: "A Dynamic Analysis of Permanent Extension of the President's Tax Relief." Over the past six months, the Treasury Department staff has been studying the dynamic effects of tax cuts on the economy. The results of this analysis, previewed in this box, were released yesterday in more complete form (available at http://www.treas.gov/offices/tax-policy/.
A bit of background: Most official analysis of tax policy is based on what economists call "static assumptions." While many microeconomic behavioral responses are included, the future path of macroeconomic variables such as the capital stock and GNP are assumed to stay the same, regardless of tax policy. This approach is not realistic, but it has been the tradition in tax analysis mainly because it is simple and convenient.
In his 2007 budget, President Bush directed the Treasury staff to develop a dynamic analysis of tax policy, and we are now reaping the fruits of those efforts. The staff uses a model that does not consider the short-run effects of tax policy on the business cycle, but instead focuses on its longer run effects on economic growth through the incentives to work, save and invest, and to allocate capital among competing uses.
The Treasury report describes what will happen to the economy if the tax relief of the past few years is made permanent, compared to the alternative scenario of reverting back to the tax code as it was in 2000. Specifically, the report analyzes the effects of lower taxes on dividends and capital gains, the effects of lower taxes on ordinary income, and the extension of other tax cuts, including the new 10% bracket, the expanded child credit and marriage-penalty relief. Here are three main lessons.
Lesson No. 1: Lower tax rates lead to a more prosperous economy.
According to the Treasury analysis, a permanent extension of the recent tax cuts leads to a long-run increase in the capital stock of 2.3%, and a long-run increase in GNP of 0.7%. In today's economy, such a GNP expansion would mean an extra $90 billion a year that the nation can spend on consumer goods to raise living standards, or capital goods to maintain prosperity. More than two-thirds of this expansion occurs within 10 years.
Lesson No 2: Not all taxes are created equal for purposes of promoting growth.
Some tax rate reductions have a profound impact on incentives and economic growth, while others have minimal or even adverse effects. The Treasury staff reports particularly large bang-for-the-buck from the reductions in dividends and capital-gains taxes. Even though these tax cuts account for less than 20% of the static revenue loss from permanent tax relief, they produce more than half of the long-run growth.
At the opposite end of the spectrum are the tax reductions from the 10% bracket, child credit and marriage-penalty relief. These tax cuts put money in people's pockets when, during the recent recession, the economy needed a short-run boost to aggregate demand. They also fulfill other objectives, such as making the tax system more progressive. But they illustrate that not all tax cuts promote long-run growth. Treasury estimates that without the tax reductions from the 10% bracket, child credit and marriage-penalty relief, the long-run increase in GNP would be larger -- 1.1% rather than 0.7%.
Lesson No 3: How tax relief is financed is crucial for its economic impact.
Like all of us, the government eventually has to pay its bills. In technical terms, the government faces an intertemporal budget constraint that ties the present value of government spending to the present value of tax revenue. This means that when taxes are cut, other offsetting adjustments are required to make the numbers add up.
The Treasury's main analysis assumes that lower tax revenue will over time be accompanied by reduced spending on government consumption. But the report also shows what happens if spending cuts are not forthcoming. In this alternative scenario, a permanent extension of recent tax relief is assumed to lead to an eventual increase in income taxes.
The results are strikingly different. Instead of increasing by 0.7% in the long run, GNP now falls by 0.9%. Tax relief is good for growth, but only if the tax reductions are financed by spending restraint. One exception: Lower taxes on dividends and capital gains promote growth, even if they require higher income taxes.
These Treasury results are sure to spark debate and further research. While the Treasury report is not the last word on dynamic analysis, it is a big step toward a more realistic view of tax policy.
Absolute faith has been shown, consistently, to breed intolerance. And intolerance, history teaches us, again and again, begets violence.
---------------------------------- The duty of a patriot in this time and place is to ask questions, to demand answers, to understand where our nation is headed and why. If the answers you get do not suit you, or if they frighten you, or if they anger you, it is your duty as a patriot to dissent. Freedom does not begin with blind acceptance and with a flag. Freedom begins when you say 'No.'
posted on June 14, 2007 06:40:36 AM new Incomes are up. Much of this is driven by tax cuts. That's right ... tax cuts. It's all very simple, really. You allow people to keep more of what they earn, and they will do more to earn more.
Let's see what the impact of the Bush tax cuts have had on the those in the lower tax bracket. Yes the average person saved a whole $250.00. I am sure that is a huge benefit for them. Just think of what they can do with the huge windfall. tsk tsk tak
Fully one-third of President Bush's tax cuts in the last three years have gone to people with the top 1 percent of income, who have earned an average of $1.2 million annually, according to a report by the nonpartisan Congressional Budget Office to be published Friday.
The report calculated that households with incomes in that top 1 percent were receiving an average tax cut of $78,460 this year, while households in the middle 20 percent of earnings - averaging about $57,000 a year - were getting an average cut of only $1,090.
The new estimates confirm what independent tax analysts have long said: that Mr. Bush's tax cuts have been heavily skewed to the very wealthiest taxpayers. Those are also the people, however, who pay a disproportionate share of federal income taxes.
The calculations, which were requested by Congressional Democrats, are all but certain to intensify a central debate between Mr. Bush and Senator John F. Kerry, the Democratic presidential nominee.
Mr. Bush has argued that the tax cuts provided crucial support to the economy at a time when it was mired in a recession and reeling from the effects of a stock market collapse, terrorist attacks and corporate scandals.
Mr. Kerry has argued that the cuts were tilted so much in favor of the wealthy that they provided relatively little stimulus to the economy and set the stage for record budget deficits. Since 2001, the federal budget has deteriorated from a surplus of more than $100 billion to a deficit expected to exceed $400 billion in 2004.
Mr. Bush's top economic priority has been to make his tax cuts permanent, rather than letting them expire at the end of this decade as they would under current law. Mr. Kerry would seek to roll back the tax cuts for households with incomes above $200,000 a year, a move his campaign estimates would save $860 billion over 10 years, and use that money in large part to pay for a vast new national health care plan.
According to the new report from the Congressional Budget Office, about two-thirds of the benefits from the tax cuts, enacted in 2001 and 2003, went to households in the top fifth of earnings, with an average income of $203,740.
But the report also gave Republicans support for their contention that tax reduction had brought some benefit to people in almost all income categories. People with the bottom fifth of income, for example, averaging earnings of only $16,620, saw their effective tax rate drop to 5.2 percent from 6.7. Yet because lower- and many middle-income families had been paying very little federal income tax in the first place, those in that bottom fifth of earnings received an average tax cut of only $250.
"It doesn't matter who you are, the report shows that you are better off now than you were before the tax cuts,'' said a House Republican aide. "It's showing that everybody's tax burden has gone down as a result of the tax cuts.''
The tax cuts of 2001 and 2003 reduced tax rates for people in all income brackets. But they had a disproportionate effect on people at the very highest income levels because they had already been paying a disproportionate share of total federal taxes and in part because stock dividends got a special lower rate.
People in the very top income categories fared better by almost any measure, according to the report. The average after-tax income for people in the top 1 percent of income earners climbed 10.1 percent, while that of those in the middle 20 percent climbed 2.3 percent, and that of those in the bottom fifth only 1.6 percent.
Put another way, people with the top 1 percent of income saw their share of the tax burden drop to 20.1 percent after the tax cuts from 21.9 percent under the old law.
William G. Gale, a longtime tax analyst at the Brookings Institution, said the new Congressional report was consistent with his own calculations on the distribution of benefits from Mr. Bush's tax cuts.
"It's not just that lower-income people are getting smaller benefits,'' Dr. Gale said. "It's also that these tax cuts will eventually have to be paid for with either spending cuts or tax increases, and those are likely to be less progressive than the taxes they are paying now.''
Absolute faith has been shown, consistently, to breed intolerance. And intolerance, history teaches us, again and again, begets violence.
---------------------------------- The duty of a patriot in this time and place is to ask questions, to demand answers, to understand where our nation is headed and why. If the answers you get do not suit you, or if they frighten you, or if they anger you, it is your duty as a patriot to dissent. Freedom does not begin with blind acceptance and with a flag. Freedom begins when you say 'No.'
posted on June 14, 2007 06:46:49 AM newYou get more of the behavior you reward, and you get less of the behavior you punish. Most (but certainly not all) parents recognize this. The more you penalize hard word with high taxes, the less hard work you will get. The more you reward achievement and hard work the more work you'll get. More work = growing economy = more government revenue = lower deficits.If, that is, the government doesn't increase spending faster than the revenue increases.
It is worth repeating: If, that is, the government doesn't increase spending faster than the revenue increases.
We all know that during the Bush administration federal spending has increased.
spending by the federal government, adjusted for inflation, during the Clinton years vs. the Bush years. In Clinton's first term, federal expenditures rose 4.7 percent. In his second term, they rose 3.7 percent. In the first term of the Bush administration, however, spending rose 19.2 percent
Cumulative growth in federal expenditures, adjusted for inflation, during the Clinton years actually shrunk by 1.1 percent. Yet, in the Bush first term, it rose 15 percent.
So the bottom line Linda is how does Bush expect to lower deficits by cutting taxes and increasing federal spending? It does sound like it is good fiscal policy.
Absolute faith has been shown, consistently, to breed intolerance. And intolerance, history teaches us, again and again, begets violence.
---------------------------------- The duty of a patriot in this time and place is to ask questions, to demand answers, to understand where our nation is headed and why. If the answers you get do not suit you, or if they frighten you, or if they anger you, it is your duty as a patriot to dissent. Freedom does not begin with blind acceptance and with a flag. Freedom begins when you say 'No.'
posted on June 14, 2007 07:44:43 AM new
In a February 6 article detailing the Bush administration's Fiscal Year 2008 budget, The New York Times reported President Bush's claim that the spending plan "would wipe out the deficit in five years without raising taxes." In fact, the White House's prediction that the budget will reach balance in 2012 rests on the assumption that Congress will stop raising the exemption level of the alternative minimum tax (AMT) -- an increase that the Bush administration proposed be passed again for FY 2008. Without a continuation of this temporary fix, the AMT would increase the income taxes of millions of middle-class Americans in the years to come. While the Bush administration has often stated that a refusal to extend a temporary tax cut would constitute a tax increase, and the Times has previously referred to the AMT as a "giant undeclared tax increase," the February 6 article failed to note that Bush's budget projections rely on the greater tax revenues that would be collected if the AMT fix is not extended.
From the Times article, headlined "Bush Releases Budget Aimed to Erase Deficit":
President Bush unveiled a $2.9 trillion budget on Monday that he said would wipe out the deficit in five years without raising taxes, setting up a clash with the Democratic-run Congress and charting a course for Republicans to continue his policies long after he leaves office.
[...]
Speaking to reporters after meeting with the cabinet, the president said, "We have proven, and I strongly believe Congress needs to listen to, a budget which has no tax increase, and a budget, because of fiscal discipline, that can be balanced in five years."
The article went on to quote a GOP memo urging Republicans on Capitol Hill to emphasize their efforts to "balance the budget without raising taxes":
In an internal party strategy memorandum circulated on Capitol Hill, a senior Republican aide wrote that the budget "gives us a huge (and rare, given our new status) opportunity to get a jump on the Democrats and stay on the offensive for weeks to come."
The memorandum continued, "Our message will be one that repeatedly challenges the Democrats to rein in federal spending and balance the budget without raising taxes on the American people."
But at no point in the lengthy article did the Times note that Bush's current projection of a balanced budget in 2012 assumes that, in the years between, millions of Americans would pay more in taxes as a result of the AMT.
Enacted in 1970, the AMT was originally designed to keep wealthy individuals from using loopholes and shelters to pay little or no income taxes. But because the AMT's exemption level is not indexed for inflation it has in recent years threatened to affect an increasing number of middle-income taxpayers, as Robert Kuttner explained in an April 7, 2005, American Prospect article:
[N]ow, due to inflation coupled with administration tax policies, the AMT is hitting millions of ordinary families, many earning well under $100,000 a year. Within five years, 37 percent of people earning between $50,000 and $75,000 and 73 percent of those with incomes between $75,000 and $100,000 will pay the AMT, compared with less than 3 percent three years ago. Nearly all families earning over $100,000 will pay it, according to a Brookings Institution study.
In recent years, Congress has spared many middle-class taxpayers from the AMT by passing temporary patches that have raised the exemption level at the cost of tens of billions of dollars in annual revenue. The Bush administration's new budget proposes yet another one-year patch. But the administration's long-term projections -- in which the deficit turns to surplus in 2012 -- assume that beyond FY 2008 the government will receive an increasing amount of revenue from the AMT as it affects more and more taxpayers.
The Bush administration has previously argued that a refusal to extend tax cuts represents a tax increase. For instance, in a September 21, 2006, speech, Bush warned the audience that if the Democrats gained control of Congress in the midterm elections they would not extend his tax cuts and therefore "raise your taxes":
BUSH: They may not call it a tax increase. They may want you to think something different. But if they don't extend the tax cuts that are set to expire, the working people, the small business owners, those that are struggling to put food on the table for their families, the taxes are going to go up.
Now, they're going to say -- they may not tell you they're going to raise your taxes. They're just going to say they're just going to let the tax relief expire. That's like a boss who came in and said, you know something, I'm going to let your last pay raise expire. We're not going to let it happen.
Additionally, in an April 10, 2005, article, Times reporter Edmund L. Andrews described the AMT as a "giant undeclared tax increase":
Cynics have long predicted that the Bush administration, plagued by budget deficits, will eventually start raising taxes. But now it is becoming clear how it would do so: the alternative minimum tax.
Baffling in its complexity and often bizarre in its impact, the alternative minimum tax is a giant undeclared tax increase that will ensnare tens of millions of moderate-income families in the next several years.
In contrast to the Times, numerous other print outlets noted the White House's budget gimmickry.
From a February 5 McClatchy Newspapers article:
For several years, Congress has avoided the AMT's impact on middle-class families by passing one-year patches. Bush's budget assumes no more patches after the 2008 tax year. He also assumes that new revenues from the AMT will help him balance the budget by 2012. Congress is unlikely to go along, however.
[...]
The president takes a pass on how he thinks the AMT issue will be resolved. With each passing year it would rake in more revenues for the Treasury if left unfixed -- $93 billion by 2012, according to the nonpartisan Congressional Budget Office.
From a February 6 Associated Press article:
Democrats, however, charged that the president is able to produce a surplus only on paper by using overly optimistic assumptions about how much revenue the economy will generate over the next five years and by leaving out expensive items such as further war costs after 2009 or providing money beyond this year to fix the alternative minimum tax so that it doesn't hit millions of middle-income taxpayers.
From a February 6 Los Angeles Times article:
Under the president's scenario, the deficit would remain virtually unchanged next year at $239 billion, then decline every year until 2012, when it would record a small surplus.
But that surplus develops only because the administration does not include the budgetary effects of waging the conflicts in Iraq and Afghanistan, nor of shielding middle-income taxpayers from the alternative minimum tax.
From the February 6 Washington Post article:
House Speaker Nancy Pelosi (D-Calif.) also criticized the president for allowing the alternative minimum tax to expand to millions of additional families by 2012, subjecting them to substantial tax increases. The tax was originally conceived as a way to ensure that wealthy Americans did not escape paying taxes.
Absolute faith has been shown, consistently, to breed intolerance. And intolerance, history teaches us, again and again, begets violence.
---------------------------------- The duty of a patriot in this time and place is to ask questions, to demand answers, to understand where our nation is headed and why. If the answers you get do not suit you, or if they frighten you, or if they anger you, it is your duty as a patriot to dissent. Freedom does not begin with blind acceptance and with a flag. Freedom begins when you say 'No.'
posted on June 14, 2007 12:21:37 PM new
ROFLMHO at all that.
Is THAT supposed to make MORE American's willing to have the liberals RAISE their taxes even HIGHER????
Don't THINK so.
===============
For anyone with the ability to understand our US tax RATES....and how much they DECREASED under this administration.....here is the history of what we've paid before and what we're paying NOW and then YOU decide if the liberals RAISING YOUR taxes is what you support. BEFORE you elect them - because RAISING your taxes is what THEY have PROMISED to do. Hear them LOUD and CLEAR....and believe them.
"While the democratic party complains about everything THIS President does to protect our Nation": "What would a Democrat president have done at that point?"
"Apparently, the answer is: Sit back and wait for the next terrorist attack."
posted on June 14, 2007 12:26:24 PM new
Tax Brackets—2006 Taxable Income
Joint return
Single taxpayer Rate
$0–$15,100 $0–$7,500 10.0%
15,100–61,300 7,500–30,650 15.0
61,300–123,700 30,650 –74,200 25.0
123,700 –188,450 74,200–154,800 28.0
188,450–336,550 154,800–336,500 33.0
336,550 and up 336,500 and up 35.0
==================================
During the clinton administration.....there were less rate schedules and they were HIGHER....and the dems are promising to do it to you again.
Two higher tax brackets were added at the top in 1993 - under clinton, and then taxes in all brackets were lowered - under bush in 2001 through 2003 as follows:
posted on June 14, 2007 03:15:28 PM new
Linda you still do not get it. The Federal taxes went down big deal.
A person making $60,000 in 1992 paid $16,800 in taxes. The person making $60,000 in 2006 paid $15,000 in taxes. That is only a difference of $1,800. It is not some astronomical amount. I suppose that would be enough for you to retire on.
In 1992 gasoline was half what is now. Utilities were a lot cheaper so were groceries and education. Any savings a person had in 2006 because of a lower federal tax rate was eaten away an increase in just about everything else.
I for one would glad have a slight increase in taxes if it went toward better eductaion and health care for kids. Is that something you would be willing to do or don't you care enough about the future for our kids?
Absolute faith has been shown, consistently, to breed intolerance. And intolerance, history teaches us, again and again, begets violence.
---------------------------------- The duty of a patriot in this time and place is to ask questions, to demand answers, to understand where our nation is headed and why. If the answers you get do not suit you, or if they frighten you, or if they anger you, it is your duty as a patriot to dissent. Freedom does not begin with blind acceptance and with a flag. Freedom begins when you say 'No.'
posted on June 14, 2007 03:54:44 PM new
kids should have to pay for their own education, whatever happened to kids working for a living? It was those progressive child labor laws passed by democrats that turned our kids into lazy bums with their greasy little hands out...and as for gas prices, when I was a kid WE MADE OUR OWN GASOLINE!!
posted on June 14, 2007 04:00:54 PM new
No, ld, it's YOU who refuses to see that the liberal dems have promised to raise our taxes.
There's no getting around that FACT. Unless you don't believe THEM. lol lol lol
And with their spending on pork....they're doing exactly what they told the voters they were GOING TO CHANGE.
hypocrites. They've got plenty of things they're going to spend, spend, spend on. And they, as liberals believe, can ONLY do that IF they raise OUR taxes.
Now you can choose to keep your head in the sandpit and pretend they haven't promised to raise our taxes....but voters need to be AWARE that's what's coming IF they give them more power.
It's just in my lifetime I've NEVER heard ANYONE say they want to pay more taxes....they're NOT paying enough already. lol
Course there are always some wacko's who say that when it won't affect their pocket books, because they're already on the government birth-to-death nanny care programs. lol
posted on June 14, 2007 04:56:36 PM new
Maybe if the bushit administration paid for their own war WE wouldn't have our to have our taxes pay for it.
I wonder how idiots like linduh expect to pay for the war they enjoy so much without raising taxes ????
The price of everything has risen....so taxes should stay the same???...only to the selfish, fascist totally UN-PATRIOTIC who don't want to contribute to their country.
ONLY traitors who hate America, like linduh, would want to stop paying taxes.
posted on June 14, 2007 05:56:29 PM new"kids should have to pay for their own education, whatever happened to kids working for a living? It was those progressive child labor laws passed by democrats that turned our kids into lazy bums with their greasy little hands out...and as for gas prices, when I was a kid WE MADE OUR OWN GASOLINE!!
Yeah, Profe! Roll back history! We don't need no high falutin' laws to protect the little brats. Kick their little asses and rub their noses into some dirt and they will grow into somethin we can be proud of...the image of George Bush and other wingnuts. What do they spect? A free ride? Let them know their feets are made for walkin' and thats what they will do.
Toughen them up and someday they will be able to speak just like George.
God bless merica!
"I wish you'd have given me this written question ahead of time so I could plan for it…I'm sure something will pop into my head here in the midst of this press conference, with all the pressure of trying to come up with answer, but it hadn't yet….I don't want to sound like I have made no mistakes. I'm confident I have. I just haven't — you just put me under the spot here, and maybe I'm not as quick on my feet as I should be in coming up with one."
—President George W. Bush, after being asked to name the biggest mistake he had made, Washington, D.C., April 3, 2004
posted on June 15, 2007 06:42:18 AM newkids should have to pay for their own education, whatever happened to kids working for a living?
I am not talking about the government paying for education. I was referring to government providing the kids with the necessary tools to get a proper education - schools with proper teacher student ratios, updated text, teachers getting paid a decent wage, schools that are maintained and kept up. If kids have the proper learning environment perhaps they will be better people in the long run.
Besides it was Bush that passed the No Child Left Behind Act and did not provide the proper funding for it.
Absolute faith has been shown, consistently, to breed intolerance. And intolerance, history teaches us, again and again, begets violence.
---------------------------------- The duty of a patriot in this time and place is to ask questions, to demand answers, to understand where our nation is headed and why. If the answers you get do not suit you, or if they frighten you, or if they anger you, it is your duty as a patriot to dissent. Freedom does not begin with blind acceptance and with a flag. Freedom begins when you say 'No.'
posted on June 15, 2007 06:49:29 AM new
linduh, ""because they're already on the government birth-to-death nanny care programs. lol""
I guess linduh has never driven on a street or freeway, nor ever used any product that was transported on our highways, nor needed police or fire protection, nor needed her food and medications safeguarded, nor has ever been in a major disaster, nor needed her country protected or represented in the world, nor accepted any SS checks, nor needed any laws that protect her rights and safety.
But she never needed education and I'm certain she's never entered a library so maybe HER taxes should be cut.
posted on June 15, 2007 06:56:54 AM newNo, ld, it's YOU who refuses to see that the liberal dems have promised to raise our taxes. There's no getting around that FACT. Unless you don't believe THEM. lol lol lol. And with their spending on pork....they're doing exactly what they told the voters they were GOING TO CHANGE.
Wake up Linda. If you want to believe the past 6 years under Bush have been like living in heaven you are truly blind. Bush's tax cuts amounted to squat for the working classes. Under Bush the deficit has climed to staggering numbers. Bush implemented programs without proper funding them.
If you want to talk about pork projects, the Republicans had 6 years of being the majority in Congress and it was them that spent, spent and spent. Do you remember the bridge to NOWHERE. Who was that it? It was Republican Ted Stevens who wanted this $320 million bridge. Wake up and realize there are plenty of examples of the Republicans spending like there is no tomorrow during the first 6 years of the Bush administration.
Not all tax increases are bad. Some people are willing to have a tax increase if the tax increase goes for something meaningful. As I have previously shown you, the tax cuts under Bush did not amount to much. If Democrats did raise taxes by the 3% that Bush had previous cut, would a tax increase of $1700 cause you to be poor?
Absolute faith has been shown, consistently, to breed intolerance. And intolerance, history teaches us, again and again, begets violence.
---------------------------------- The duty of a patriot in this time and place is to ask questions, to demand answers, to understand where our nation is headed and why. If the answers you get do not suit you, or if they frighten you, or if they anger you, it is your duty as a patriot to dissent. Freedom does not begin with blind acceptance and with a flag. Freedom begins when you say 'No.'
posted on June 15, 2007 07:36:14 AM newI was referring to government providing the kids with the necessary tools to get a proper education - schools with proper teacher student ratios, updated text, teachers getting paid a decent wage, schools that are maintained and kept up. If kids have the proper learning environment perhaps they will be better people in the long run.
posted on June 15, 2007 09:13:33 AM new "I was referring to government providing the kids with the necessary tools to get a proper education - schools with proper teacher student ratios, updated text, teachers getting paid a decent wage, schools that are maintained and kept up. If kids have the proper learning environment perhaps they will be better people in the long run.
Such an improved focus on education would surely reduce the future wingnut population. It might even send a wave of enlightenment to those previously denied a good education. Only drawback is that you and Mingo might lose your favorite plaything.
posted on June 15, 2007 10:55:13 AM newOnly drawback is that you and Mingo might lose your favorite plaything.
I am sure the "favorite plaything" is already trying to find a way to clone herself so her vulgar and vile behavior can live on long after she is turned into dust.
Absolute faith has been shown, consistently, to breed intolerance. And intolerance, history teaches us, again and again, begets violence.
---------------------------------- The duty of a patriot in this time and place is to ask questions, to demand answers, to understand where our nation is headed and why. If the answers you get do not suit you, or if they frighten you, or if they anger you, it is your duty as a patriot to dissent. Freedom does not begin with blind acceptance and with a flag. Freedom begins when you say 'No.'
posted on June 15, 2007 12:34:34 PM new
LOL on spending MORE on education. It's long had millions and millions and millions MORE thrown at it....and it's STILL not working.
Throwing more money at a failing system is NOT going to change it. Getting rid of teachers, teadchers unions, all the garbage they now take the childs time up with and get back to teaching the three "R's" is what's needed.
Shut down the financially draining Dept. of Ed.
Give vouchers to parents so THEY can choose schools that are actually teaching students something.
Now all they are is an indocrination system to all the social garbage liberals/progressives want them taught.
========================
EDUCATION NOTEBOOK:
The Facts on Federal Education Spending
November 9, 2006
Sweeping victories in the midterm elections have put Democrats in charge of the 110th Congress. After twelve years out of power, what will Democrats seek to accomplish in federal education policy?
One common theme in their recommendations has been to increase spending on both K-12 and postsecondary education. The Democratic Party’s 2004 National Platform criticized President Bush for “breaking his word” on No Child Left Behind and “providing schools $27 billion less than he promised, literally leaving millions of children behind.” The platform also criticized the Bush administration for not providing enough federal funding for higher education and student loans, charging that “President Bush tried to charge more for student loans and eliminate Pell Grants for 84,000 students.”
Actually, federal education spending has grown dramatically over the past six years under President Bush and the Republican Congress. But more importantly, whether it’s Republicans or Democrats increasing federal funding,more federal dollars have not improved American education in recent decades.
Consider K-12 education spending. Annual U.S. Department of Education spending on elementary and secondary education has increased from $27.3 billion in 2001 to $38 billion in 2006, up by nearly 40 percent.
According to the department, annual spending on the Title I program to assist disadvantaged children grew by 45 percent between 2001 and 2006.
In 2007, the department will spend 59 percent more on special education programs than it did in 2001.
Unfortunately, there’s little reason to believe even these dramatic funding increases will lead to improvements in student learning in American schools.
Since the early 1970s, inflation-adjusted federal spending per pupil has doubled. Over that period, student performance has not markedly improved, according to the long-term National Assessment of Educational Progress (NAEP), which is designed to measure historical trends.
Under a Republican-controlled Congress, federal spending on higher education has increased almost as dramatically as K-12 spending over the past six years. For example, annual Department of Education spending on federal Pell Grants grew from $8.7 billion in 2001 to $13 billion in 2006, nearly 50 percent growth. The federal government spends considerably more on higher education today than it did during the Clinton administration.
According to the College Board, federal funding for higher education in 2004-2005 totaled $90 billion,a real increase of 103 percent over ten years.
An increasing number of students receive federal subsidies for higher education. For example, 5.3 million students received federal Pell Grants in 2005, an increase of 44 percent over ten years.
In all, in 2006 more than 10 million Americans will receive various federal subsidies for higher education.
Unfortunately, as with K-12 spending, there’s little evidence that federal spending on higher education is achieving its objective. Quite simply, college tuition is becoming more expensive each year. According to the College Board, the total cost of tuition and fees at four-year private and public colleges increased by 5.9 percent and 7.1 percent, respectively, during the 2005-06 school year.
According to economist Richard Vedder, college tuition costs increased by 295 percent between 1982 and 2003, a growth rate higher than health care costs (195 percent), housing (84 percent), and all items (83 percent). In his book, Going Broke By Degree: Why College Costs Too Much, Dr. Vedder argues that increased federal spending on higher education has contributed to rising tuition costs. In other words, federal subsidies are not making higher education more affordable because colleges and universities simply consume this additional source of revenue.
These are important lessons that policymakers and taxpayers should keep in mind during the 110th Congress. Calls for more funding for public schools and subsidies for college tuition may be popular on the campaign trail, but simply increasing federal funding for education is not the answer. If it were, we should have seen better results by now.
===============
Dan Lips is an Education Analyst at the Heritage Foundation www.Heritage.org.
posted on June 15, 2007 01:39:55 PM new
Supply-side Spin
June 11, 2007
Sen. John McCain has said President Bush's tax cuts have increased federal revenues. But revenues would have been even higher without them.
Summary
Republican presidential candidate Sen. John McCain has said that the major tax cuts passed in 2001 and 2003 have "increased revenues." He also said that tax cuts in general increase revenues. That’s highly misleading.
In fact, the last half-dozen years have shown us that we can't have both lower taxes and fatter government coffers. The Congressional Budget Office, the Treasury Department, the Joint Committee on Taxation, the White House’s Council of Economic Advisers and a former Bush administration economist all say that tax cuts lead to revenues that are lower than they otherwise would have been – even if they spur some economic growth. And federal revenues actually declined at the beginning of this decade before rebounding. The growth in the past three years that McCain refers to brings revenues back in line with the 40-year historical average as a percentage of gross domestic product.
It’s unclear how much of the growth can be attributed to the tax cuts. Capital gains tax receipts did increase greatly from 2003 to 2006, but the CBO estimates that they will level off and decrease in the next few years. The growth overwhelmingly resulted from a sharp rise in corporate tax receipts, the cause of which is a topic of debate.
Analysis
At the May 15 Republican presidential debate, Arizona Sen. John McCain was asked about his opposition to President’s Bush 2001 tax cuts. (Also, the senator voted against the 2003 tax cuts.)
Fox News Channel's Wendell Goler: Sen. McCain, you opposed President Bush’s 2001 tax cuts. Now you say you were wrong. How can you convince Republican voters you will push a Democratic Congress hard enough to make those tax cuts permanent, sir?
Sen. McCain: Well, first of all, I didn't say that I was wrong. I said that the reason why I opposed those tax cuts was because we didn't rein in spending.
And the fact is the tax cuts have dramatically increased revenues.
Earlier this year in a National Review interview published March 6, McCain said tax cuts in general created revenue gains:
National Review’s Ramesh Ponnuru: If you could get the Democrats to agree, or at least to come to the table on entitlements or on tax simplification, are those circumstances under which you'd be willing to accept a tax increase?
Sen. McCain: No; no.
Ponnuru: No circumstances?
Sen. McCain: No. None. None. Tax cuts, starting with Kennedy, as we all know, increase revenues. So what's the argument for increasing taxes? If you get the opposite effect out of tax cuts?
Other Republicans and administration officials, including the president, have made similar statements about the power of the 2001 and 2003 tax cuts. But McCain and his colleagues are not accounting for the decrease in revenue that accompanied the cuts.
“Federal revenue is lower today than it would have been without the tax cuts,” Alan D. Viard of the conservative American Enterprise Institute told the Washington Post last October. Viard, who worked in the Treasury Department’s Office of Tax Analysis and the White House’s Council of Economic Advisers under President Bush, told FactCheck.org that “nobody can absolutely prove that.” Proof would require time travel and a reversal of tax policy. “But among economists, there’s no dispute.”
Tax cuts can be a sound economic move that spurs growth, says Viard. “But it doesn’t mean that [the cuts] gained revenue."
If the government had reined in spending – as McCain wanted – the senator might have more to brag about. Viard says economists would expect a boost to the economy if tax relief had been matched by spending cuts. When the cuts are deficit-financed (as these are), it’s still possible to have positive growth, he continues, but that’s a different matter from saying there’s a net increase.
“I found Sen. McCain’s statement rather disappointing on this matter,” he says, referring to the GOP debate.
Federal agencies have published similar statements regarding the effect of tax cuts on federal receipts. From the Congressional Budget Office’s 2007 Budget Outlook: “The expiration of tax provisions as scheduled has a substantial impact on CBO’s projections, especially beyond 2010 when a number of revenue-reducing tax provisions enacted in the past several years are slated to expire,” the report says. “Almost all of the expiring provisions reduce revenues.”
The Joint Committee on Taxation estimated that the 2001 tax legislation (the Economic Growth and Tax Relief Reconciliation Act) would cause government revenues to be 107.7 billion less than they would have been in the absence of the legislation in 2004, 107.4 billion less in 2005 and 135.2 billion less in 2006. The committee's estimates for the effect of the Jobs and Growth Tax Relief Reconciliation Act of 2003 were that it would reduce otherwise projected revenues by 148.7 billion in 2004, 82.2 billion in 2005 and 20.7 billion in 2006. The JCT makes its comparisons against the Congressional Budget Office's receipts baselines.
The projections were not off the mark. A look at the committee's estimates of total federal revenue including the effects of the 2003 tax legislation versus the actual federal receipts shows that the JCT's projections were higher than actual revenues in 2003 and 2004 and slightly lower than actual receipts in 2005.
Also, Rob Portman, director of the Office of Management and Budget, and Ed Lazear, chairman of the Council of Economic Advisers, told journalists at the Washington Times last October that the tax cuts prompted economic and stock market growth. But, the paper reported, “they conceded that the tax cuts…cut deeply into government revenue.”
Revenue Ups and Downs
When we contacted the McCain campaign, aide Matt David responded in an e-mail that Sen. McCain was referring to the increase in federal revenues between 2001 and 2006. Government receipts rose 20.9 percent between 2001 and 2006, and they were up 35 percent between 2003 and 2006.
When we asked for McCain’s explanation of how the tax cuts have increased revenue, his campaign replied:
McCain aide: "The 2001 and 2003 tax cuts contributed to the economic growth, rise in profitability, and shifts in the form of compensation that have produced strong receipts growth over the past several years. Good tax policy contributes to more rapid growth in receipts."
We’re not quibbling with most of that. A Treasury Department analysis found that the tax cuts prompted the creation of jobs and increased the gross domestic product. If McCain had said the tax cuts contributed to economic growth, he would have been correct. McCain's last sentence may be true, too, but not if the phrase "good tax policy" is equated with the '01 and '03 tax cuts.
Federal revenue normally increases every year. In fact, revenues have declined in only five years since 1962. The 35 percent growth between 2003 and 2006 is significant – the last major growth in revenue was between 1997 and 2000, when the economy was booming and federal receipts rose 28.2 percent. But the recent three-year period also comes after three years of decreases, a drop Viard attributes to the 2001 tax cuts and the start of a recession that same year.
The Office of Management and Budget describes the rebound in the past few years as a return to the historical average. As a percentage of GDP, federal receipts are now 18.4 percent of GDP (in line with the 40-year historical average of 18.3 percent).
McCain also told the Economic Club of Memphis on April 16: "If the federal government can't be funded with current revenues, which are growing at historic rates, then the government is too big and is growing too fast."
The percentage growth since 2003 may be historic, but the government’s coffers are no more flush with funds as a percentage of the economy than they have been on average for 40 years. In our judgment, McCain’s statements give a false impression about the impact of the tax cuts.
The Source of the Growth
But can the increase in receipts over the last three years — though not a net increase — be attributed to the tax cuts? Where has the growth in revenue come from? That is a tough question for economists to answer definitively, but the bulk of the growth in federal receipts has been in corporate tax revenue.
In 2006, according to the CBO, individual income tax revenue was 1,043.9 billion, an increase of 5 percent since 2001. Corporate tax revenue was 353.9 billion in 2006, a 134 percent rise from 2001. That’s a dramatic increase.
“It really is astonishing,” Viard says of those numbers. But he can’t point to major corporate tax cuts that would have spurred the growth. Corporate profits are doing very well and the economy is growing, but “I don’t know that there’s a single, clear cut reason for that.”
A May 2006 report by the Federal Reserve Board did not find that the 2003 dividend tax cut had a major impact on stock prices.
Federal Reserve Board authors: “We do not find any imprint of the dividend tax cut news on the value of the aggregate U.S. stock market. On the other hand, high-dividend stocks outperformed low-dividend stocks by a few percentage points over the event windows, suggesting that the tax cut did induce asset reallocation within equity portfolios.”
That contradicts President Bush’s pronouncements. In May 2006, when the president signed an extension of tax relief legislation, he said: "The cuts on dividends and capital gains are reaching families and businesses alike.... By cutting the taxes on dividends and capital gains, we helped add about $4 trillion in new wealth to the stock market."
The CBO analyzed data to uncover the causes of revenue growth since 2003 in response to a request from Sen. Kent Conrad, chair of the Senate budget committee. In a letter to Conrad, CBO Director Peter R. Orszag says that overall receipts increased by 1.9 percentage points as a share of GDP and that the increase “disproportionately” comes from a rise in corporate income tax revenues.
Orszag attributes two-thirds of the bump in corporate taxes to an increase in corporate profits. The rest he pins to tax policy. For instance, when provisions allowing partial expensing of investment in equipment expired, tax revenue increased. In other words, revenue declined when the provisions were enacted and bumped up again when they expired.
Orszag says there was growth in capital gains realizations in individual tax receipts, but measures such as lower rates on dividends and an increase in the child tax credit, as well as a drop in job wages, caused a reduction in revenues. A CBO chart in Orszag's letter shows that legislation (not counting an impact on capital gains) had a total negative effect on revenue growth.
The impact of the tax cuts on economic growth is a matter of debate among economists. We're not voicing a view on whether the tax cuts should have been enacted; that, too, is a separate discussion. But it is clear they did not "increase revenues."
Absolute faith has been shown, consistently, to breed intolerance. And intolerance, history teaches us, again and again, begets violence.
---------------------------------- The duty of a patriot in this time and place is to ask questions, to demand answers, to understand where our nation is headed and why. If the answers you get do not suit you, or if they frighten you, or if they anger you, it is your duty as a patriot to dissent. Freedom does not begin with blind acceptance and with a flag. Freedom begins when you say 'No.'
:-S Now THAT'S weird.
