RebKell's Junkie Boards

[cferraro04]

Are you talking about the tax cuts for the wealthiest Americans?

Now you see...you went and done it...

http://www.ctj.org/pdf/gwbdata.pdf

[beknighted]

[cferraro04]

As usual BEK your economical analysis is eruditic in approach but anti-Bush and pro-Clinton...however, it is important to explore the effects of the Bush cuts further. I think you will find the following link interesting:

http://www.heritage.org/Research/Taxes/bg2001.cfm

Ten Myths About the Bush Tax Cuts—and the Facts

Myth #1: Tax revenues remain low.
Fact: Tax revenues are above the historical average, even after the tax cuts.

Myth #2: The Bush tax cuts substantially reduced 2006 revenues and expanded the budget deficit.
Fact: Nearly all of the 2006 budget deficit resulted from additional spending above the baseline.

Myth #3: Supply-side economics assumes that all tax cuts immediately pay for themselves.
Fact: It assumes replenishment of some but not necessarily all lost revenues.

Myth #4: Capital gains tax cuts do not pay for themselves.
Fact: Capital gains tax revenues doubled following the 2003 tax cut.

Myth #5: The Bush tax cuts are to blame for the projected long-term budget deficits.
Fact: Projections show that entitlement costs will dwarf the projected large revenue increases.

Myth #6: Raising tax rates is the best way to raise revenue.
Fact: Tax revenues correlate with economic growth, not tax rates.

Myth #7: Reversing the upper-income tax cuts would raise substantial revenues.
Fact: The low-income tax cuts reduced revenues the most.

Myth #8: Tax cuts help the economy by "putting money in people's pockets."
Fact: Pro-growth tax cuts support incentives for productive behavior.

Myth #9: The Bush tax cuts have not helped the economy.
Fact: The economy responded strongly to the 2003 tax cuts.

Myth #10: The Bush tax cuts were tilted toward the rich.
Fact: The rich are now shouldering even more of the income tax burden.

[cferraro04]

BEK: The statistics are quite compelling, and have been consistent for several years. The only group that's had a meaingful increase in average real income under the Bush Administration is the top 20 percent (and that increase has been disproportionately concentrated in the top 1 percent). The next quintile has more or less held steady, and the bottom three quintiles (that is, the bottom 60% of the population) has lost ground.


Myth #10: The Bush tax cuts were tilted toward the rich.
Fact: The rich are now shouldering even more of the income tax burden.

Popular mythology also suggests that the 2001 and 2003 tax cuts shifted more of the tax burden toward the poor. While high-income households did save more in actual dollars than low-income households, they did so because low-income house­holds pay so little in income taxes in the first place. The same 1 percent tax cut will save more dollars for a millionaire than it will for a middle-class worker simply because the millionaire paid more taxes before the tax cut.

In 2000, the top 60 percent of taxpayers paid 100 percent of all income taxes. The bottom 40 percent collectively paid no income taxes. Lawmakers writing the 2001 tax cuts faced quite a challenge in giving the bulk of the income tax savings to a population that was already paying no income taxes.

Rather than exclude these Americans, lawmak­ers used the tax code to subsidize them. (Some economists would say this made that group's col­lective tax burden negative.)First, lawmakers low­ered the initial tax brackets from 15 percent to 10 percent and then expanded the refundable child tax credit, which, along with the refundable earned income tax credit (EITC), reduced the typical low-income tax burden to well below zero. As a result, the U.S. Treasury now mails tax "refunds" to a large proportion of these Americans that exceed the amounts of tax that they actually paid. All in all, the number of tax filers with zero or negative income tax liability rose from 30 million to 40 million, or about 30 percent of all tax filers.[17] The remaining 70 percent of tax filers received lower income tax rates, lower investment taxes, and lower estate taxes from the 2001 legislation.

Consequently, from 2000 to 2004, the share of all individual income taxes paid by the bottom 40 per­cent dropped from zero percent to –4 percent, mean­ing that the average family in those quintiles received a subsidy from the IRS. (See Chart 6.) By contrast, the share paid by the top quintile of households (by income) increased from 81 percent to 85 percent.

Expanding the data to include all federal taxes, the share paid by the top quintile edged up from 66.6 percent in 2000 to 67.1 percent in 2004, while the bottom 40 percent's share dipped from 5.9 per­cent to 5.4 percent. Clearly, the tax cuts have led to the rich shouldering more of the income tax burden and the poor shouldering less.[18]

Conclusion
The 110th Congress will be serving when the first of 77 million baby boomers receive their first Social Security checks in 2008. The subsequent avalanche of Social Security, Medicare, and Medicaid costs for these baby boomers will be the greatest economic challenge of this era.

This should be the budgetary focus of the 110th Congress rather than repealing Bush tax cuts or allowing them to expire. Repealing the tax cuts would not significantly increase revenues. It would, however, decrease investment, reduce work incen­tives, stifle entrepreneurialism, and reduce eco­nomic growth. Lawmakers should remember that America cannot tax itself to prosperity.

Brian M. Riedl is Grover M. Hermann Fellow in Federal Budgetary Affairs in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.

[cferraro04]

BEK: and it dropped to its lowest level more than 18 months after the Bush tax cuts were adopted, which makes it hard to argue for the theory that the tax cuts were responsible for economic growth


Myth #9: The Bush tax cuts have not helped the economy.
Fact: The economy responded strongly to the 2003 tax cuts.

The 2003 tax cuts lowered income, capital gains, and dividend tax rates. These policies were designed to increase market incentives to work, save, and invest, thus creating jobs and increas­ing economic growth. An analysis of the six quarters before and after the 2003 tax cuts (a short enough time frame to exclude the 2001 re­cession) shows that this is exactly what hap­pened (see Table 3):

* GDP grew at an annual rate of just 1.7 percent in the six quarters before the 2003 tax cuts. In the six quarters following the tax cuts, the growth rate was 4.1 percent.



* Non-residential fixed investment declined for 13 consecutive quarters before the 2003 tax cuts. Since then, it has expanded for 13 consec­utive quarters.
The S&P 500 dropped 18 percent in the six quarters before the 2003 tax cuts but increased by 32 percent over the next six quarters. Divi­dend payouts increased as well.
* The economy lost 267,000 jobs in the six quar­ters before the 2003 tax cuts. In the next six quarters, it added 307,000 jobs, followed by 5 million jobs in the next seven quarters.
* The economy lost 267,000 jobs in the six quar­ters before the 2003 tax cuts. In the next six quarters, it added 307,000 jobs, followed by 5 million jobs in the next seven quarters.[16]

Critics contend that the economy was already recovering and that this strong expansion would have occurred even without the tax cuts. While some growth was naturally occurring, critics do not explain why such a sudden and dramatic turn­around began at the exact moment that these pro-growth policies were enacted. They do not explain why business investment, the stock market, and job numbers suddenly turned around in spring 2003. It is no coincidence that the expansion was powered by strong investment growth, exactly as the tax cuts intended.

The 2003 tax cuts succeeded because of the sup­ply-side policies that critics most oppose: cuts in mar­ginal income tax rates and tax cuts on capital gains and dividends. The 2001 tax cuts that were based more on demand-side tax rebates and redistribution did not significantly increase economic growth.

[beknighted]

All I think I need to say in response to this is that some of the claims made in the piece you quoted are refuted by the link you posted earlier.

I also could point out that it's from the Heritage Foundation, which never has met a tax cut it didn't like.

Oh, and the comment about the deficits resulting from increased spending is cute, but ignores that the deficits would have been significantly lower if the tax cuts hadn't been enacted. The graph of the budget deficits/surpluses over the last 15 years is quite instructive when compared to changes in tax law.

And I hardly think that the national data on income and unemployment, compiled by the Bush Administration, let alone the Dow Jones Industrial Average and the NASDAQ Index, are biased towards the Clinton Administration. The facts on income are particularly obvious: The bottom 60% of the population has lost ground, the next 20% has tread water and only the top 20% has gained since Bush came into office.

[cferraro04]

BEK: but ignores that the deficits would have been significantly lower if the tax cuts hadn't been enacted.

No it doesn't...

Myth #2: The Bush tax cuts substantially reduced 2006 revenues and expanded the budget deficit.
Fact: Nearly all of the 2006 budget deficit resulted from additional spending above the baseline.

Critics tirelessly contend that America's swing from budget surpluses in 1998–2001 to a $247 bil­lion budget deficit in 2006 resulted chiefly from the "irresponsible" Bush tax cuts. This argument ignores the historic spending increases that pushed federal spending up from 18.5 percent of GDP in 2001 to 20.2 percent in 2006.[4]

The best way to measure the swing from surplus to deficit is by comparing the pre–tax cut budget baseline of the Congressional Budget Office (CBO) with what actually happened. While the January 2000 baseline projected a 2006 budget surplus of $325 billion, the final 2006 numbers showed a $247 billion deficit—a net drop of $572 billion. This drop occurred because spending was $514 bil­lion above projected levels, and revenues were $58 billion below (even after $188 billion in tax cuts). In other words, 90 percent of the swing from surplus to deficit resulted from higher-than-projected spending, and only 10 percent resulted from lower-than-projected revenues.[5] (See Chart 1.)

Furthermore, tax revenues in 2006 were actually above the levels projected before the 2003 tax cuts. Immediately before the 2003 tax cuts, the CBO pro­jected a 2006 budget deficit of $57 billion, yet the final 2006 budget deficit was $247 billion. The $190 billion deficit increase resulted from federal spend­ing that was $237 billion more than projected. Rev­enues were actually $47 billion above the projection, even after $75 billion in tax cuts enacted after the baseline was calculated.[6] By that standard, new spending was responsible for 125 percent of the higher 2006 budget deficit, and expanding revenues actually offset 25 percent of the new spending.

The 2006 tax revenues were not substantially far from levels projected before the Bush tax cuts. Despite estimates that the tax cuts would reduce 2006 revenues by $188 billion, they came in just $58 billion below the pre–tax cut revenue level pro­jected in January 2000.[7

BEK: The bottom 60% of the population has lost ground, the next 20% has tread water and only the top 20% has gained since Bush came into office.

The facts do not bear this out...

Expanding the data to include all federal taxes, the share paid by the top quintile edged up from 66.6 percent in 2000 to 67.1 percent in 2004, while the bottom 40 percent's share dipped from 5.9 per­cent to 5.4 percent. Clearly, the tax cuts have led to the rich shouldering more of the income tax burden and the poor shouldering less.[18] ]

The difference is even more dramatic with the pro-growth 2003 tax cuts. The CBO calculated that the post-March 2003 tax cuts would lower 2006 revenues by $75 billion, yet 2006 revenues came in $47 billion above the pre–tax cut baseline released in March 2003. This is not a coincidence. Tax cuts clearly played a significant role in the economy's performing better than expected and recovering much of the lost revenue.

[CamrnCrz1974]

[cferraro04]

Entitlement costs? Like the war in Iraq?

Nice try Cam...

That and a long list of entitlements...some of which are listed below...

Major Entitlement Programs...
# Cash Social Insurance Programs - Social Security
# Federal Civilian and Military Retirement Programs
# Means-Tested Income Support Programs
# Government-Sponsored Health Insurance - Medicare

[CamrnCrz1974]

The Heritage Foundation? What next, using Fred Phelps as an expert on religion?

Try something from GAO.

[womens_hoops]

[beknighted]

Uh, cf, the statistics I was citing had to do with total income, not taxes paid. The bottom 60% of the population makes less money in real terms now - even when you consider the benefits of the tax cuts to them - than it did before Bush came into office, and has been losing ground steadily during that time. Only the top 20% (and, again, mostly the top 1%) has increased overall income in that time. In other words, for most people the tax cuts have not made up for the income they've lost during the Bush Administration.

As for the deficit, it's pretty simple arithmetic. If the tax cuts reduced federal income by $100, and the deficit was $150, eliminating the tax cuts would have reduced the deficit by $100. The idea that the deficits arose simply because of increased spending is - what's that term that Bush used during the 2000 debates? Ah, yes - fuzzy math at best. (And, as an aside, that was a Republican President working with a Republican Congress that increased spending so fast, wasn't it?)

Finally, I didn't mention this last night, but the notion that government revenues aren't related to tax rates is incredible. If you don't believe me, ask yourself how much money the government would have if the tax rate was 0%. Now, you can argue that certain marginal tax rates are more or less likely to lead to economic growth and that there is a complex interaction between tax rates and federal revenues, but you lose any claim to making a serious argument when you say that there is no relation to between tax rates and revenues and that the only thing that matters is economic growth. When the Heritage Foundation makes such an obviously wrong argument, you know that it's just mouthing partisan talking points.

[womens_hoops]

http://washingtontimes.com/op-ed/20070212-091022-6828r.htm

[womens_hoops]

http://washingtontimes.com/op-ed/20070212-091022-6828r.htm

http://zfacts.com/p/318.html

[Michael]

[LTF1]

What I want in terms of fiscal responsibility is a Democratic President and a Republican Congress. Under Clinton, that scenario created a pretty effective stalemate relatively speaking re spending in this country.

Of course a Dem Prez and a Dem Congress spend like crazy. And a Republican Prez and a Republican Congress spend like crazy. And a Republican Pres and a Dem Congress spend like crazy. The first two strike me as obvious as to why: buy as many constituents as you can. The third requires some explanation.

When Reagan was president the price he paid for his tax cuts and increased military spending was to keep domestic spending high which is what Demos wanted. And BAM (surprise, surprise, big deficits)

G. W. Bush, with his own party in Congress, increased domestic spending, military spending and cut taxes. With Dems in control of Congress my guess is that Bush will buy just enough Democratic support to keep the war going until he leaves office (unless the wheels fall off the surge/escalation which they appear to be in danger of doing)

So how did Clinton and his Republican congress manage to ultimately get budget surpluses? Well, loathing ea other helped, but I think that Republican congressmen were not inclined to spend much on Democratic constituents and there was no need for a military buildup in the 90s, indeed the Cold War dividend (or whatever it was called) allowed for cuts in military spending. Furthermore, Clinton got his tax increase to balance the budget through before the Republicans gained control of Congress. So put together Repub reluctance to spend on Democratic constituencies, decreased military spending, and the tax increases and you wound up with a fairly nice budgetary situation for the country.

(And before cferraro rants, I think Bush's tax cuts helped the economy, but his inability to limit spending threatens the economy down the road)

Now the problem for 2008 is I think we are going to wind up with a Republican president and a Democratic Congress. So the out of control spending is likely to continue (the war will be over though--with the US logistically and financially backing the Shiites in the civil war leading to some form of partitioning of Iraq--which should have been done from day one. As was done by the US and Britain in the Balkaans)

For those of you who remember me from the old ESPN hidden board, you will remember I supported the war. I was wrong. NOT because I think going to war was the wrong thing to do, I primarily supported it on the humanitarian ground of removing Saddam from power, which I still think was the right reason. My mistake was in believing that this administration could competently prosecute it. It couldn't. Bush has to be one of the worst wartime presidents in American history (perhaps only LBJ and James Madison were worse). Rumsfeld should have been fired no later than 2004 and Petraeus or some other general put in charge much earlier.

During the American civil war, Lincoln fired his first Sec of War and general after general after general until he found the team that saved the Union (Grant and Sherman). Lincoln made an honest and compelling case for the war from the beginning (to save American democracy by saving the Union), Bush had WMDs, al-Qaida connections, spread democracy, bring down the tyrant, etc etc, some of which were legit and others that were make-believe and none of which he articulated well.

(Of course, over 500,000 Americans died in the Civil War cf to the 3000 plus in Iraq, but the stakes were higher i the 1860s)

I was shocked that after Saddam was captured we didn't just turn him over to a Shiite militia for rapid execution (a la Mussolini or Ceascue (sp? Romania's commie dictator) defacto partition the country (which would have meant population shifts-aka "ethnic cleansing" a la Serbia, Kosovo, Bosnia) and be gone.

But NO, incredibly (to me) the Bush administration has tried to keep Iraq together, something we didn't try to do with Yugoslavia. Indeed, our goal was to break Yugoslavia up, which we did. Why Blair, who got Clinton on board for NATOs war against Yugoslavia (Serbia), did not press upon Bush the need for Iraq's partition is beyond me.

_________________
"I'd work very hard but I'm lazy,
I can't take the pressure & it's starting to show
In my heart, you know how it pains me,
A life of leisure is no life you know"

http://www.youtube.com/watch?v=aPeJixp-zp4&feature=related

[Michael]

[pilight]

[LTF1]

While I am generally economically conservative, but this country could use a little more socialized health care (beyond medicare and medicaid and the various state sponsored programs--see, we already have socialized health care to a degree--just like we have socialized "public" schools--and the country has survived, even thrived)

Health care is a huge burden on big business (which increasingly is thinking a more socialist system is the way to go--and that is when it will happen) and impossible for small businesses. The insurance industry makes health care in this country ridiculously expensive and even people with insurance who have catastrophic illnesses wind up going broke but (theoretically at least) who can't even claim bankruptcy for it.

Now I know the conservative rant: look at the low quality of care in the UK and the delays for surgery etc. Well, the UK' s health service is a disaster and I have heard mixed things from Canadians (some love it, some don't). I however I have spent a fair amount of time in Belgium and that nation's socialized system is fantastic (and from what I hear over there so is neighboring France's).

Ultimately, this country will have some form of socialized system. I think the next step should be a medicare plan that covers all children from conception to age 18. Actually, children should have been covered before old folks imo

_________________
"I'd work very hard but I'm lazy,
I can't take the pressure & it's starting to show
In my heart, you know how it pains me,
A life of leisure is no life you know"

http://www.youtube.com/watch?v=aPeJixp-zp4&feature=related

[pilight]

[pilight]

[cthskzfn]

only warmongers and scumbag profiteers can continue to "support" the US invasion/occupation of iraq.

it's nice to see some people have changed their mind, but so what? it doesn't help the hundreds of thousands of people who have lost their lives there in the last four years.

most americans do not support bush on the war; they "spoke" in the november elections, and the result- bush escalates. oops, i meant to say he "surged".

has there been a more illuminating example of the farce that is US "democracy"?

meanwhile, the rhetoric re: chavez increases. iran may just have to wait while we clean up our own backyard.

_________________
Silly, stupid white people might be waking up.

[Michael]

[pilight]

[pilight]