fjl2nd Posted March 19, 2012 Share Posted March 19, 2012 Would a Higher Top Tax Rate Raise Revenues? Really solid write-up. Something with substance for a change. Debunking the myth perpetuated by the GOP than raising taxes on the wealthy won't actually raise revenues for the government. Raising revenues WILL have to happen to actually balance the budget. A little taste: Although conservatives routinely deny that tax cuts have anything to do with budget deficits, the slightest bit of common sense says otherwise. According to the Congressional Budget Office, federal revenues will consume just 16.3 percent of gross domestic product this year. The postwar average is about 18.5 percent. The reason they are so much lower is because the huge tax cuts of the George W. Bush administration were extended by President Obama in 2010, along with an additional cut in the payroll tax that replaced an earlier Obama tax cut called the Making Work Pay credit. Without all these tax cuts, revenues would be about 2 percent of gross domestic product higher, according to the C.B.O. Only in some fantasy world would it be possible to balance the budget without higher revenues. In the real world, it is impossible to balance the budget with revenues at 16.4 percent of G.D.P. Therefore, taxes will have to rise. The only question is who will pay more? Everyone, I think, but the wealthy will have to pay a lot more, because they have a much greater capacity to do so than most Americans. If they don’t pay more, then the rest of us will have to bear a higher tax burden or suffer having programs like Medicare, which almost everyone will benefit from eventually, decimated. Republicans, however, are quite adamant that not only must the wealthy not pay any more in taxes – but, in fact, must have their taxes further reduced. Every Republican presidential candidate favors lower taxes on the wealthy. Mitt Romney, for example, has proposed cutting the top income tax rate to 28 percent from 35 percent. The reason for the conservative reluctance to estimate the revenue-maximizing top tax rate is that academic research generally shows that it is much, much higher than the current top rate or any that has been proposed by the Obama administration. The two latest studies are these: 1. A National Bureau of Economic Research working paper published in November by Thomas Piketty, Emmanuel Saez and Stefanie Stantcheva found virtually no supply-side effect from cuts in the top tax rate since 1975. That is, there was no significant increase in output resulting from them; hence there would be little negative output effect from raising the top rate. Consequently, the revenue-maximizing top rate may be as high as 83 percent, they estimate. 2. A National Bureau of Economic Research working paper published last month by Christina Romer and David Romer estimates that the revenue-maximizing rate is 84 percent. Even assuming a higher response by the wealthy to earning income – something economists call elasticity – than the Romers believe is likely, the top rate could still rise to 73 percent before a Laffer curve effect set in. Link to comment Share on other sites More sharing options...
birdog1960 Posted March 19, 2012 Share Posted March 19, 2012 Would a Higher Top Tax Rate Raise Revenues? Really solid write-up. Something with substance for a change. Debunking the myth perpetuated by the GOP than raising taxes on the wealthy won't actually raise revenues for the government. Raising revenues WILL have to happen to actually balance the budget. A little taste: but, but, but...who will create the jobs? who will drop their crumbs for us? trickle down doesn't work. if it did we wouldn't see the massive income inequality and increasing poverty levels over the last decade. "let them eat cake" is alive and well, even on this board. Link to comment Share on other sites More sharing options...
UConn James Posted March 19, 2012 Share Posted March 19, 2012 (edited) Because those studies about how to get Chinese prostitutes (in China) to drink alcohol responsibly... and literally countless other items/programs/unnecessaries. That's seriously important stevestojan that our federal government has to increase taxes to pay for, and which shouldn't be cut first. Edited March 19, 2012 by UConn James Link to comment Share on other sites More sharing options...
Alaska Darin Posted March 19, 2012 Share Posted March 19, 2012 The problem in Washington has nothing to do with the amount of revenue they take in. It has to do with how much they spend. When they can explain how they're going to live within about 18% of this nation's GDP, we can start talking about raising taxes. Anyone who thinks the government deserves/requires more money is absolutely nuts. Link to comment Share on other sites More sharing options...
/dev/null Posted March 19, 2012 Share Posted March 19, 2012 http://www.spectator.co.uk/coffeehouse/7666673/50p-tax-rate-is-raising-less-than-expected.thtml Link to comment Share on other sites More sharing options...
UConn James Posted March 19, 2012 Share Posted March 19, 2012 (edited) WSJ | Alan Blinder: The U.S. Cruises Toward a 2013 Fiscal Cliff : As tax cuts expire and spending falls, the economy will be hit with a 3.5% decline in gross domestic demand Now, you don't really believe the defense budget will be cut that much, do you? Probably the rest won't happen, either. But if it all did, the resulting fiscal contraction—consisting of both tax increases and spending cuts—would be in the neighborhood of 3.5% of gross domestic product, depending on exactly how you count certain items, all at once. That's a big fiscal hit, roughly as big as what a number of European countries are trying to do right now, though with limited success and with notable collateral damage to their economies. An abrupt fiscal contraction of 3.5% of GDP would be a disaster for the United States, highly likely to stifle the recovery. ----- And just to note: a lot of governments have thought the the Laffer Curve doesn't apply to them. And then they got a rude awakening. Edited March 19, 2012 by UConn James Link to comment Share on other sites More sharing options...
Rob's House Posted March 19, 2012 Share Posted March 19, 2012 (edited) Would a Higher Top Tax Rate Raise Revenues? Really solid write-up. Something with substance for a change. Debunking the myth perpetuated by the GOP than raising taxes on the wealthy won't actually raise revenues for the government. Raising revenues WILL have to happen to actually balance the budget. A little taste: That's because most Republicans don't understand the concept any better than you or the (*^*&%^$^#writing the article. Go look up Laffer curve and Hauser's law & when you can reconcile the two then come back & we'll talk. Maybe Magox can help you. I don't have time to educate ignorant liberals today. Edited March 19, 2012 by Rob's House Link to comment Share on other sites More sharing options...
IDBillzFan Posted March 19, 2012 Share Posted March 19, 2012 On the NYT would be stupid enough to title an article" Would a higher Top Tax Rate Raise Revenues?" Really? If we tax people more, it will increase tax revenues? Wow. This never dawned on me. I look forward to the follow up story, "Would eating food fight hunger pangs?" Link to comment Share on other sites More sharing options...
TPS Posted March 19, 2012 Share Posted March 19, 2012 That's because most Republicans don't understand the concept any better than you or the (*^*&%^$^#writing the article. Go look up Laffer curve and Hauser's law & when you can reconcile the two then come back & we'll talk. Maybe Magox can help you. I don't have time to educate ignorant liberals today. All you have to do is look at the period from 2000 to 2008 (I'll ignore the recession) to debunk hoser's law. Revenues as a % of gdp ranged from a max of 20.6% to a min of 16.1%--that 4.5% swing means lost revenues on average amounted to $600 billion, and most of the loss was due to the Bush cuts in personal taxes. On-budget revenues (which excludes SS) swung from an $80 billion surplus in 2000 to an average $500 billion deficits from 2002-2006, as the Bush tax cuts took effect. But, if it fits your ideology, you can ignore the facts.... Link to comment Share on other sites More sharing options...
ieatcrayonz Posted March 19, 2012 Share Posted March 19, 2012 All you have to do is look at the period from 2000 to 2008 (I'll ignore the recession) to debunk hoser's law. Revenues as a % of gdp ranged from a max of 20.6% to a min of 16.1%--that 4.5% swing means lost revenues on average amounted to $600 billion, and most of the loss was due to the Bush cuts in personal taxes. On-budget revenues (which excludes SS) swung from an $80 billion surplus in 2000 to an average $500 billion deficits from 2002-2006, as the Bush tax cuts took effect. But, if it fits your ideology, you can ignore the facts.... Were those the only factors or have you left some out? Do you think less people in the work force had an impact? Link to comment Share on other sites More sharing options...
GG Posted March 19, 2012 Share Posted March 19, 2012 All you have to do is look at the period from 2000 to 2008 (I'll ignore the recession) to debunk hoser's law. Revenues as a % of gdp ranged from a max of 20.6% to a min of 16.1%--that 4.5% swing means lost revenues on average amounted to $600 billion, and most of the loss was due to the Bush cuts in personal taxes. On-budget revenues (which excludes SS) swung from an $80 billion surplus in 2000 to an average $500 billion deficits from 2002-2006, as the Bush tax cuts took effect. But, if it fits your ideology, you can ignore the facts.... Strip out cap gains in 2000 to do a true apples to apples, professor. No one will dispute that raising tax rates won't raise more revenues. Bartlett is being duplicitous in citing studies on overall tax rates in arguing for an increased rate on the top percentile. He also mischaracterizes the tax reform proposals. Lower rates will be accompanied by eliminating deductions. Link to comment Share on other sites More sharing options...
Alaska Darin Posted March 19, 2012 Share Posted March 19, 2012 All you have to do is look at the period from 2000 to 2008 (I'll ignore the recession) to debunk hoser's law. Revenues as a % of gdp ranged from a max of 20.6% to a min of 16.1%--that 4.5% swing means lost revenues on average amounted to $600 billion, and most of the loss was due to the Bush cuts in personal taxes. On-budget revenues (which excludes SS) swung from an $80 billion surplus in 2000 to an average $500 billion deficits from 2002-2006, as the Bush tax cuts took effect. But, if it fits your ideology, you can ignore the facts.... Holy oversimplification, batman. You don't get to pretend there was a "budget surplus" in 2000 when the entire thing was a charade. The piper is gonna get paid eventually and the last recession is the fruit of the entire thing. The fundamentals of the US economy are broken because of Keynesian economics, not in spite of it. Link to comment Share on other sites More sharing options...
IDBillzFan Posted March 19, 2012 Share Posted March 19, 2012 You don't get to pretend there was a "budget surplus" in 2000 when the entire thing was a charade. Forgive me for overstating the obvious, but there is no way you will ever get someone like TPS to agree to this premise. Link to comment Share on other sites More sharing options...
jjamie12 Posted March 19, 2012 Share Posted March 19, 2012 I don't know anyone serious who thinks that raising tax rates won't raise revenue. The (narrowly defined) issue is that the increase in tax revenue is always lower than the projected increase -- which, when budgets are created based on higher than projected revenues, inevitably leads to ever increasing deficits. Which still doesn't address the ever larger issue of relying on an ever smaller percentage of people to fund the working of the government. The 'rich' don't have enough to bail the gov't out of its self-dug hole. Link to comment Share on other sites More sharing options...
birdog1960 Posted March 19, 2012 Share Posted March 19, 2012 No one will dispute that raising tax rates won't raise more revenues. i must have been hallucinating when i heard and read republicans, especially the on air personalities make this argument. i'm pretty sure some one has made it here: that tax revenues would actually decrease if taxes were raised on the rich because overall income would decrease and the wealthy would take their toys and go elsewhere, where they're appropriately loved. so you're admitting it's a ridiculous argument? Link to comment Share on other sites More sharing options...
fjl2nd Posted March 19, 2012 Author Share Posted March 19, 2012 That's because most Republicans don't understand the concept any better than you or the (*^*&%^$^#writing the article. Go look up Laffer curve and Hauser's law & when you can reconcile the two then come back & we'll talk. Maybe Magox can help you. I don't have time to educate ignorant liberals today. He goes over the Laffer Curve in the piece. And links to a CBO study that says Bush tax cuts reduced revenues by $3 Trillion through 2011. Laffer Curve is a theory and it may even be right in some cases. Cutting from 50% and higher is different than cutting from 35% however. Link to comment Share on other sites More sharing options...
\GoBillsInDallas/ Posted March 19, 2012 Share Posted March 19, 2012 Really solid write-up. You describe this as being a "really solid-write-up". Why? What credentials do you have that you are able to analyze the economics in this article to determine that it is "really solid"? Link to comment Share on other sites More sharing options...
fjl2nd Posted March 19, 2012 Author Share Posted March 19, 2012 The problem in Washington has nothing to do with the amount of revenue they take in. It has to do with how much they spend. When they can explain how they're going to live within about 18% of this nation's GDP, we can start talking about raising taxes. Anyone who thinks the government deserves/requires more money is absolutely nuts. How about we get back to 18% of GDP first? Only taking in around 16%. You describe this as being a "really solid-write-up". Why? What credentials do you have that you are able to analyze the economics in this article to determine that it is "really solid"? I do have a B.S. in Economics... Just saying. Link to comment Share on other sites More sharing options...
DC Tom Posted March 19, 2012 Share Posted March 19, 2012 How about we get back to 18% of GDP first? Only taking in around 16%. I do have a B.S. in Economics... Just saying. All economics degrees are B.S. Link to comment Share on other sites More sharing options...
fjl2nd Posted March 19, 2012 Author Share Posted March 19, 2012 All economics degrees are B.S. LOL. Got to give you props on that one. Link to comment Share on other sites More sharing options...
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