US Taxes

[Xantar]

Can you explain away how the cost of collecting taxes has gone down, or that all the claims that cutting taxes was going to lower revenue, when it in fact caused an increase?

You either misunderstood me or you misunderstand your own numbers.

The cost of collecting taxes has gone down, and I never disputed that. But revenues have in fact gone down in real terms. Your own numbers say so. Grab an inflation calculator and look at 2002-2004 for yourself. Gross tax revenue remained static which means revenue went down thanks to inflation. Taxes collected per capita went down both in real and nominal terms after 2002. So I say once again that the tax cuts did in fact lower revenues.

Secondly, you are confusing correlation with causation, and frankly I'm disappointed to see you making an amateurish mistake like that. The fact that tax revenues are up during the Bush years compared to the Clinton years means squat. I could just as easily argue that Bush #41's tax increases raised revenues as well. That's what the numbers say. Clinton didn't lower taxes after coming into office by any significant amount, and yet his administration pulled in more tax revenue than Bush or even Reagan (who was a big tax cutter). It simply doesn't work that way. You can't say, based on this data, that Bush's cuts caused an increase in revenue (even if the increase in revenue existed).

Bush increased revenue, at least to the norm of increases through the years as you pointed out, by making some of the most sweeping tax cuts in history. People said that would never happen, and yet here we are.

As I just explained above, revenue went down. And I did not in fact point out that revenues increased at a normal rate. What I said was that the increases could be accounted for entirely by inflation and a GDP growth rate of 3% which is actually tiny. That 3% number was just an underestimate I was using to make things simple. Look it up sometimes. If we had 3% growth year on year, the President would get slammed for presiding over a "sluggish economy."

My point was that these revenue increases you're so enamored of could have just as easily been accomplished if Bush had walked into office and sat there twiddling his fingers. Inflation happens regardless of what he does. A GDP growth of 3% is basically guaranteed in the American economy unless Bush accidentally drops a nuclear bomb in a major city or something. You cannot say that his tax cuts caused an increase in revenue. If anything, the evidence points the other way: Bush could have gotten even more revenue by simply leaving the tax code alone. I'm not saying that would be a smart thing to do either, but if more revenue is what you want, that's the way to do it.

My point in all this is that cutting taxes helps to increase revenue to the government. It does this by spurring the economy and increasing the revenue of companies and the general public.

Unfortunately, the best evidence that anybody has come up with is that this process takes over a decade. Spurring the economy, if it can indeed be done, is not instantaneous. The trickle down effect takes time. Hiring people, managing inventories, realigning capital and all sorts of other processes I don't understand takes time. The most widely accepted argument anybody has ever made in favor of Reagan's deficit spending was that we reaped the benefit in the form of a boom economy...during the Clinton years. Meantime, the first President Bush had to raise taxes or else the out of control spending would have sent us into 6% inflation or higher.

So if you want to argue that Bush's tax cuts have increased revenues, wait until his successor comes into office and look at some data. Your current evidence simply doesn't back you up.

[Professor S]

I was under the impression that inflation had remained pretty much static over the last few years. At least that is what the economist said I was watching on CNN. He was talking about how the new gas prices were finally causing an increase in inflation. So if inflation has remained static, why have revenues gone up?

And yes, while correlation does not necessarily mean causation... it also means that there could very well be a connection. Causation vs. Correlation can also be an excellent excuse to ignore anything good that comes out of a new tax system. The numbers and laws involved, when combined with changes in the populace, are so complicated that you could never really PROVE that changes in tax law caused anything.

My point was that cutting taxes causes increase in revenues. It did and does. Its the spending that causes the debt. and operating defeceit.

[Xantar]

Originally Posted by Not Professor X

I was under the impression that inflation had remained pretty much static over the last few years. At least that is what the economist said I was watching on CNN. He was talking about how the new gas prices were finally causing an increase in inflation.

I'm not sure what you're asking here. If inflation has remained static (and I wouldn't really know), that means that the price of everything still goes up. And anyway, I calculated all my inflation using the calculator on the website of the people who calculate the CPI. I just entered a number for 1993 and it gave me what that amount is worth in 2005. Seeing as it's the CPI that determines the official rate of inflation, I'm pretty sure it's accurate.

So if inflation has remained static, why have revenues gone up?

Ok, I'll go over this just one more time.

Gross revenues according to your spreadsheet:

2002 - 2,016,627,269,000
2003 - 1,952,929,045,000
2004 - 2,018,502,103,000

There is no increase in revenues there. I don't even have to do any calculations. Just look at the numbers. And you will note that before 2002, gross collected taxes always increased by a hundred trillion dollars.

And now per capita:

2002 - 6,977.92
2003 - 6,691.47
2004 - 6,848.87

6,848.87 is smaller than 6,977.92. Even without taking inflation into account, any fourth grader can see that your claim that "Revenue and and taxes collected per capita have GONE UP under Bush" is clearly false. I don't know how much more clearly I can say it.

I'm not trying to attack your political viewpoint or your stance on tax policy. It's just that the facts you're using to make your case are unequivocally wrong. I can only hope that you're actually reading this post instead of just skimming through it and getting the general gist.