Tuesday, October 28, 2008

Tax Policy: We'll Have to Talk about This Saturday

Ryan (see yesterday's post) isn't buying the beer-drinking analogy. We'll have to get into it on my show.

Meanwhile, I wonder if the beer-drinking analogy could be tweaked to account for the increase in revenue produced by tax cuts. Not sure how that would work, but the 1980s and 1990s proved that reducing taxes raises revenue. David Stockman lost his nerve, but supply-side economics produced unprecedented economic growth plus a corresponding surge of tax dollars into the federal treasury.

Someone smarter than I am will have to figure how to revise the analogy.

4 comments:

OmaSteak said...

Yesterday's bar tab tax policy analogy was a little overly complex. Let's use a real world example. Forty percent of people who work pay no income tax. A significant portion of those people also get "refunds" of their federal income tax via the "earned income credit"...which is nothing but a disguised welfare check. The top 5-10% of income earners pay better than 75% of all income tax collected. As the messiah Obama wants to raise this groups income tax rate, they will either reduce their activities which generate income subject to tax or find "loopholes" to reclassify income earned as something else. That will in the end produce less income tax dollars collected by the Federal government. It will also have a major impact on the level of economic activity in the US economy...and that's all sectors of the economy. Since the messiah wants to give additional "tax cuts" to that 40% who pay no income tax, he's going to increase their welfare payments. The Fair Tax coupled with a balanced budget amendment that includes a line item Presidential veto, is the only way to get government under control. Now the dems and the messiah are talking about the New Deal II. Anyone who cares to can review the history of both the New Deal and the Great Society and it is readily apparent both were failures...expensive and long lasting failures.

Ryan the Angry Midget said...

Omasteak,

The last balanced budget we had was in the "tax and spend" Clinton administration during the 90s, when there was actually (gasp) a budget surplus. At no point during a Republican administration since Reagan (the first major proponent of supply-side economics) has the budget been balanced let alone gotten smaller. If you'd put down your Republican talking points long enough to look closely at Obama's plan, the rates he's proposing for those who make over $250,000 is actually less than it was during the Reagan administration.

McCain's plan actually generates less revenue than Obama's plan, because in addition to cutting taxes on the 95% of Americans who would receive "tax welfare", McCain makes the Bush tax cuts permanent and provides further tax loopholes for the richest Americans. How will this increase tax revenue and balance the budget? If getting closer to a balanced budget is your criterion, Obama's tax plan would actually be better than McCain's.

What emperical evidence is there that lower tax rates for the richest Americans provides any benefit to anyone other than those individuals?

Prince of Darkness said...

Ryan,
The evidence is twofold, lower income tax rates stimulate/support economic growth and as such the taxes collected by government actually increase. Your original premise is fatally flawed. No one has the right or should expect to benefit from the fruits of someone elses labor by having government seize and redistribute any of those fruits. Liberalism is based upon equality of outcome, conservatism is based upon equality of opportunity. That is why liberalism always fails since it removes the incentive of success and punishes achievement.

Ryan the Angry Midget said...

Prince,

If what you believe is actually true, no one would aspire to be successful or become rich. Despite the fact that we tax the hell out of people that make lots of money, this has not diminished the desire people have for wealth and success. We have a business environment in this country that thrives despite incredibly high tax rates. Even now during this rough time, our economy is still one of the greatest in the world despite our high business tax rates compared to the rest of the world. Obviously, it's not as simple as you'd like to believe.

If conservatives want there to be equality of opportunity, they have a lot of work to do. Republicans continue to gut programs that help give opportunities for poor Americans to go to college, keep jobs and have families, all while ironically clutching their bibles. You can only disguise greed for so long before true motives become apparent.