Tax Cut Question for GOP CNN/YouTube debate

[tml17]

This is exactly the right question. Thanks, PoliticalSavant. Unfortunately, too few voters can understand a graph let alone the Laffer Curve. So we rarely hear politicians discuss a real issue like this in public. With no incentive to make sense, why would a politician risk her job by challenging the national obsession with cutting taxes? No math please, we are American.

[greenwavemaker]

This is a good question. If we look at the data from past adjustments we can easily determine where we are on the curve. Better questions to ask are, "where is each tax bracket on the Laffer curve?" and "how do we find the maximum points for each tax bracket?" I believe that if each tax bracket were maximized on the Laffer curve the GDP would be maximized.... as long as all of the resources are avialable...oil, breathable air, water, sunlight, farmable soil, fish for the ocean...

[Liberty654]

I don't get all the debate on this issue. Do you work harder for less money? Yes, well then you're the minority becuase most people work for some type of reward and for most people it's financial. The principle the laffer curve is based on is one of human nature not ideology. Why not raise the tax rate to 100% on one American? Then we can all have our socialist dream of sitting on our asses and reaping the rewards of others.

[ToddAldrich]

Reagans tax cuts were largely responsible for turning a NEGATIVE economic growth rate into an explodingly positive growth rate.

Taking into account for policy lag, we went from a rate of -1.9% (that is a contraction) to an explosion of +7.2%

[ToddAldrich]

(continued) If you really do know economics, you already knew that and are intentionally misleading people. That means we are left with two possibilities.

Either you were dishonest when you claimed an economics degree, or you were dishonest in your assessment.You choose.

[TruthTaste]

Good question, we know because of the Federal Reserve, they are a part of the gov't that watches things like this for us.

[saadasim]

Wrong! Federal Reserve is not part of the US government and they do not set tax decisions.

You must believe everything the government tells you.

[TruthTaste]

Wrong, they do keep an eye on taxes, their all economists.

[saadasim]

Is English your first language? Logic certainly isn't.

[TruthTaste]

You can tell when someone has lost an argument because they stop arguing the issue and get angry and start throwing around "put-downs" its called being a sore loser.

[saadasim]

The issue was whether FR is part of the US gov. It is owned and controlled by private banks. Ron Paul opposes the monopoly of the FR over currency and it's independence from the gold standard. Why is it not ok to question what the FR does?

[TruthTaste]

The gov't doesn't "own" anything. It is not an individual like a person or a corporation.

[saadasim]

Not true. Gov owns Gold bullions, buildings, etc.

A few private banks "own" shares of the Fed Reserve. Isn't a person an individual?

[TruthTaste]

Did you read my last comment, I did say a person was an individual, and NO the gov't doesn't own those things, do you understand the concept of the public coffers?

[saadasim]

Not true again. The private banks have shares of the FR. Just like a corporation , he who has shares owns it just like you are owned. Boy are you dense.

[TruthTaste]

The FR is NOT a corporation have you taken any college level econ classes?

[saadasim]

I didn't say it was a "corporation." But it is like a corporation in that it's shares are owned by private banks. You have the reading and logic ability of our great President, Bush Jr.

[TruthTaste]

Ok, I can see you don't want to talk about this anymore, I hope yours does get picked so people come online and see this little back and forth.

[yahelc]

There does not appear to be a single economist in the United States that believes that the data supports the possibility that we're on the right side of the Laffer Curve. Greg Mankiw, former Chair of Bush's Council of Economic Advisors, famously called people who argued as such as "charlatans". All the official White House estimates of the effect of the Tax Cuts showed that they led to an increase of revenue, but not close enough to pay for the loss of revenue caused by the tax cut itself.

[TruthTaste]

Have you ever taken a college level Macro Economics class?

[yahelc]

Yes. Enough to qualify for a major.

[TruthTaste]

Based on your elementary analysis I would have never guessed, which university is just giving away economics degrees?

[SirBrettley]

That's not what Mankiw said. Go read his blog.

[yahelc]

To quote from Mankiw's best selling text book:

" An example of fad economics occurred in 1980, when a small group of economists advised Presidential candidate, Ronald Reagan, that an across-the-board cut in income tax rates would raise tax revenue. They argued that if people could keep a higher fraction of their income, people would work harder to earn more income. Even though tax rates would be lower, income would rise by so much, they claimed, that tax revenues would rise.

[yahelc]

Almost all professional economists, including most of those who supported Reagan's proposal to cut taxes, viewed this outcome as far too optimistic. Lower tax rates might encourage people to work harder and this extra effort would offset the direct effects of lower tax rates to some extent, but there was no credible evidence that work effort would rise by enough to cause tax revenues to rise in the face of lower tax rates. . . .

[yahelc]

Nonetheless, the argument was appealing to Reagan, and it shaped the 1980 Presidential campaign and the economic policies of the 1980s

People on fad diets put their health at risk but rarely achieve the permanent weight loss they desire. Similarly, when politicians rely on the advice of charlatans and cranks, they rarely get the desirable results they anticipate. After Reagans election, Congress passed the cut in tax rates that Reagan advocated, but the tax cut did not cause tax revenues to rise

[ThrasybulusBrig]

As someone already noted, your understanding of economics is primitive. You need to put down left-wing economic texts and concentrate on the facts. The fact is that when Reagan cut taxes, not only did the economy recover from a decade long ailment--a fact you socialists conveniently ignore--but the Government actually saw more revenue. Check out The Laffer Curve, Part II video.

[yahelc]

Socialist? Is name calling really necessary?

You're right that revenue increased, by 80% in dollar terms during Reagan's years. But revenue always increases due to 3 reasons:

1. Increase in population

2. Inflation

3. Economic Growth

Once you adjust for pop. and inflation (neither of which has anything to do with tax policy), the Reagan numbers aren't that impressive: 19% growth in fed. revenue, in real per capita terms over the 8 years, which lags behind real economic growth for that period.

[ToddAldrich]

It is the tax cuts that helps spur the economic growth! You state revenue lagged behind growth is about as non nonsensical as it gets. OF COURSE it lagged behind growth that is what happens when you take a smaller percentage of that growth. But that is completely irrelevent to the point.

[ToddAldrich]

To state that revenues always increase is wrong also. Revenues have declined and indeed DID decline in the contraction that had it's nexus in the 2000 market crash. They did not begin rising again until (yep you guessed it) the pro-growth Bush tax cuts took effect.