[mike777]

VMars, on 2012-October-05, 19:25, said:

If there were big tax cuts and big spending hikes, how do you know which one affected revenues? Just the one that you like?

Ok waited for someone else to say this but noone..so I will


Blame macroeconomists for not telling us what the clear, clear answer to this is.

[luke warm]

PassedOut, on 2012-October-05, 16:29, said:

Still, the current deficit is a bit smaller than it was for the last Bush year and is headed in the right direction.

2008: $480B vs 2012: $1.1T is not a "bit smaller" in dollars, though it is a bit smaller as a % ... neither were the 3 prior years, all with over $1T deficits... yes, yes, i know - he inherited a mess... sigh... but think of the mess romney will inherit if he wins the election... i'm sure that too will be blamed on bush, not the failure who just left office

most of the spending categories fell somewhat, with the usual suspects rising... that's why something has to be done about medicare/social security, like it or not

one more thing about cutting taxes re: revenue growth... presently our growth is about 1.3%, which is down by about a % from last quarter 2011... now for the sake of argument, just imagine a cut in marginal tax rates by 20%, coupled with a cut in corporate rates... also imagine a 4% - 6%, or even higher (hell, the phillipines is at 6%) growth rate... do you not see what would happen? and that's not unreasonable, it's likely, given the job creation that is *guaranteed* to occur under romney

even if, which is very possible, romney's plan added $1T - $2T to the debt, the important thing is to get the number of decent-paying jobs growing, get businesses hiring (full-time) employees again

nobody knows for sure, but i'd like to have seen the resutlt if obama's 2009 stimulus money had been spent on nothing but highways, bridges, railroads - nothing but infrastructure - rather than the tree-hugging, union-coddling spending that actually occurred... you know, actual shovel-ready jobs instead of unicorn milk/rainbow dust/destined-for-bankruptcy *****

[lalldonn]

luke warm, on 2012-October-06, 07:52, said:

but think of the mess romney will inherit if he wins the election... i'm sure that too will be blamed on bush, not the failure who just left office

As it should be.

Quote

one more thing about cutting taxes re: revenue growth... presently our growth is about 1.3%, which is down by about a % from last quarter 2011... now for the sake of argument, just imagine a cut in marginal tax rates by 20%, coupled with a cut in corporate rates... also imagine a 4% - 6%, or even higher (hell, the phillipines is at 6%) growth rate... do you not see what would happen? and that's not unreasonable, it's likely, given the job creation that is *guaranteed* to occur under romney

Real GDP under Bush, complete with his tax cuts, grew at an average rate of 2.5% (compared to 4.0% under Clinton (and 2.77% under Reagan)). Your assumption is completely unreasonable.

[awm]

I really don't understand what impact lowering tax rates is supposed to have on job creation. Corporations are sitting on trillions of dollars (record profits!) which they are not using to hire people nor are they returning to investors as dividends. Why would lowering their taxes magically cause them to hire people? They hire when there is demand for their products, not when they "have money." Similarly, high-income individuals are doing really well (mostly because the stock market has doubled under Obama), but they are playing the stock market or saving their money, not hiring people. Again, they don't hire people when they "have money" -- they hire people when they need something done.

Of course, one can make the argument that lower taxes means people have more money and then they spend that money which raises demand. But if we plan to make the tax cuts deficit neutral either by eliminating deductions or through spending cuts, we are taking money out of the economy at the same rate we are putting it in. So the question becomes -- are those who receive the money more likely to spend it? Government spends all its money (and more), while wealthy individuals and big companies are known to stash their money in overseas investments (and have no particular incentive to spend it immediately anyway).

Even the "incentive to work" thing makes little sense to me. Suppose I own a business and make a million a year (pre-tax) by working 80 hour weeks. Obama raises my taxes, and I decide that it is not really worth working all these hours because my marginal return is less, and I would rather work 40 hour weeks even if this means I make only half a million a year (pre-tax). So what do I do? Well, I cut down my hours... and I hire some people to pick up the slack at my business. Hey look, I just created jobs!

Certainly there could be a situation where the post-tax earning curve is so flat and the safety net is so good that there is no real incentive to work at all, and this would be a problem. Similarly there could be a situation where lowering taxes increases revenue. However, even when the top tax rate was 90% in the US, these things didn't really happen... so assuming (without any real evidence, I might add) that we are in such a place now seems highly dubious to me.

[PassedOut]

luke warm, on 2012-October-06, 07:52, said:

2008: $480B vs 2012: $1.1T is not a "bit smaller" in dollars, though it is a bit smaller as a % ...

The US budget is by fiscal year, October 1 through September 30. Even if Romney is elected president, I don't consider him responsible for the fiscal year that just started.

The last Bush fiscal year, from October 2008 through September 2009, ended with a deficit of $1.4 trillion. However, $140 billion of that resulted from additional spending by the Obama administration for the stimulus and other appropriations, so that portion of the last Bush year deficit is fairly attributed to Obama.

Obama has reduced the yearly deficit from that of the final Bush year -- in dollars as well as in % of GDP -- but not by much. However, he is not the candidate proposing another huge across-the-board tax cut...

[y66]

awm, on 2012-October-06, 08:53, said:

I really don't understand what impact lowering tax rates is supposed to have on job creation. Corporations are sitting on trillions of dollars (record profits!) which they are not using to hire people nor are they returning to investors as dividends. Why would lowering their taxes magically cause them to hire people? They hire when there is demand for their products, not when they "have money." Similarly, high-income individuals are doing really well (mostly because the stock market has doubled under Obama), but they are playing the stock market or saving their money, not hiring people. Again, they don't hire people when they "have money" -- they hire people when they need something done.

Of course, one can make the argument that lower taxes means people have more money and then they spend that money which raises demand. But if we plan to make the tax cuts deficit neutral either by eliminating deductions or through spending cuts, we are taking money out of the economy at the same rate we are putting it in. So the question becomes -- are those who receive the money more likely to spend it? Government spends all its money (and more), while wealthy individuals and big companies are known to stash their money in overseas investments (and have no particular incentive to spend it immediately anyway).

Even the "incentive to work" thing makes little sense to me. Suppose I own a business and make a million a year (pre-tax) by working 80 hour weeks. Obama raises my taxes, and I decide that it is not really worth working all these hours because my marginal return is less, and I would rather work 40 hour weeks even if this means I make only half a million a year (pre-tax). So what do I do? Well, I cut down my hours... and I hire some people to pick up the slack at my business. Hey look, I just created jobs!

Certainly there could be a situation where the post-tax earning curve is so flat and the safety net is so good that there is no real incentive to work at all, and this would be a problem. Similarly there could be a situation where lowering taxes increases revenue. However, even when the top tax rate was 90% in the US, these things didn't really happen... so assuming (without any real evidence, I might add) that we are in such a place now seems highly dubious to me.

They don't call it Voodoo economics for nothing.

Hard to believe so many voters, debaters and reporters let stuff like this slide without demanding evidence. If you look at GDP per capita and the employment rate between 1992 and 2008 there's nothing that suggests tax rate cuts did anything to boost output or create jobs. Nothing. Nada. No output boost. No jobs created.

The notion that Romney has a credible plan for improving the economy is just too pathetic for words. Almost as pathetic as Obama's failure to nail him for this on Wednesday.

[kenberg]

I can perhaps guess a little at how rich people behave and maybe how poor people behave, but I know how I behave. Honestly I cannot think of a single decision in the last several years that was influenced by tax laws. A few years back I got tired of doing my own taxes (not that involved, I just didn't want to do it anymore) so I hired an accountant. She suggested I buy a vacation home with a mortgage. I don't want a vacation home, and I have the abhorrence of debt common to my generation, so I didn't do it. I work on and off since retirement. I enjoy it. I wouldn't work for free, but I wouldn't stop doing it if taxes went up. I don't much get involved with the stock market. I have a friend who is very involved in it. He loves it, I don't, so he does it and I don't. I'm not a rich guy, my Honda Accord has 175,000 miles on it. I am not a poor guy, the house is paid for, Becky and I will go to the beach next week and stay in a nice place. But my decisions are not based on tax rates.

If taxes were to influence me, it could have been through state taxes. I have known people who retired to Las Vegas. No state income tax, I understand. I don't like Las Vegas, my kids live in Maryland, two of Becky's three kids live here. So we stay here.

Many years back, 1970 I think, I bought a townhouse. Being able to deduct the mortgage interest from my taxable income was very, very useful at that stage of my life. I hope we keep that perk. Otoh, if someone thinks we should cap the amount that can be subtracted from income at maybe 10 or 15 K (whether on one house or two, same total cap) they would get no argument from me.

I am far more open to arguments claiming that regulation stifles growth than I am to the tax argument. I am not really knowledgeable about regulations, but from my experience I see the tax argument as pretty much hooey.

[mike777]

Ken, I would be surprised that not one single decision was influenced by tax laws.


I mean there are thousands of tax laws and rules.
--

I am also surprised that lower taxes of some kind would not influence anyone to create a single job, someplace.

[kenberg]

mike777, on 2012-October-06, 13:33, said:

I would be surprised that not one single decision was influenced by tax laws.

I mean there are thousands of tax laws and rules.

Sure, so let's hope my life does not depend on total accuracy. However, the tax on wine went up recently in Maryland. I drink the same wine and the same amount as before the tax went up. The wine store had a petition against raising the tax, but I didn't sign. The state needs the money. I don't smuggle wine in from states with lower tax rates.

I am not saying that taxes don't affect me, I am not that oblivious. But I really cannot think of anything I have or haven't done in, say, the last ten years that I would have not done or done, or done differently, if tax rates were different, where by different I mean in amounts along the lines of current political discussion.

[mike777]

kenberg, on 2012-October-06, 13:44, said:

Sure, so let's hope my life does not depend on total accuracy. However, the tax on wine went up recently in Maryland. I drink the same wine and the same amount as before the tax went up. The wine store had a petition against raising the tax, but I didn't sign. The state needs the money. I don't smuggle wine in from states with lower tax rates.

I am not saying that taxes don't affect me, I am not that oblivious. But I really cannot think of anything I have or haven't done in, say, the last ten years that I would have not done or done, or done differently, if tax rates were different, where by different I mean in amounts along the lines of current political discussion.

ok but are they not just talking about raising taxes on other people, not you?

Ok but you do know that smuggled booze is a huge business.

ok but if they have raised your taxes by a huge amount that may make you do things differently.

[PassedOut]

awm, on 2012-October-06, 08:53, said:

I really don't understand what impact lowering tax rates is supposed to have on job creation. Corporations are sitting on trillions of dollars (record profits!) which they are not using to hire people nor are they returning to investors as dividends. Why would lowering their taxes magically cause them to hire people? They hire when there is demand for their products, not when they "have money." Similarly, high-income individuals are doing really well (mostly because the stock market has doubled under Obama), but they are playing the stock market or saving their money, not hiring people. Again, they don't hire people when they "have money" -- they hire people when they need something done.

Speaking for our family businesses, I can say categorically that hiring is driven by the amount of work that needs doing, not by the amount of money in the bank. The amount of work that needs doing increases when sales increase.

[luke warm]

lalldonn, on 2012-October-06, 08:51, said:

As it should be.

so all of obama's term as president is either a credit to, or the fault of, W? well that's ... a novel way of looking at presidential politics

PassedOut, on 2012-October-06, 09:20, said:

The US budget is by fiscal year, October 1 through September 30. Even if Romney is elected president, I don't consider him responsible for the fiscal year that just started.

even if whatever happens subsequent to his election is partly because of policies he places in effect? i'll remember you said that, if he wins

y66, on 2012-October-06, 09:55, said:

The notion that Romney has a credible plan for improving the economy is just too pathetic for words. Almost as pathetic as Obama's failure to nail him for this on Wednesday.

See Thomas Sowell on the history of “trickle down” rhetoric, and how there never was a theory behind it, only a caricature: Paper

awm, on 2012-October-06, 08:53, said:

I really don't understand what impact lowering tax rates is supposed to have on job creation.

maybe this will help

Harvey Rosen, Growth, Distribution, and Tax Reform: Thoughts on the Romney Proposal (Working Paper No. 228, Princeton University, Sept. 2012), Paper.

from this site

Quote

Our results indicate that by lowering tax rates on investment and labor, the Romney tax plan would grow the economy by 7.4 percent, the capital stock by almost 19 percent, wages by almost 5 percent, and hours worked by 3 percent. The benefits would be widely enjoyed, as every income group would experience at least a 7 percent increase in after-tax income. It would benefit the federal budget as well, in that fully 60 percent of the static revenue loss from Romney’s plan would be recovered from taxing a larger economy.

so it appears this is a case of the battling economists and, as noted above, it depends on to which authority one appeals (as do most things), usually based on one's political philosophy and leanings... one thing's for sure: whoever we quote/believe, those people know far more about this than any of us posting here

[PassedOut]

luke warm, on 2012-October-06, 15:48, said:

even if whatever happens subsequent to his election is partly because of policies he places in effect? i'll remember you said that, if he wins

If Romney wins, he won't be responsible for the portion of the budget that he does not change, but he will be responsible for any changes that he makes -- just as Obama is responsible for the $140 billion of additional spending that he added to the last Bush budget. Of the $1.4 trillion deficit from Bush's final budget year, you have to lay $140 billion at Obama's feet.

[y66]

Deleted. Feeling better now.

[lalldonn]

luke warm, on 2012-October-06, 15:48, said:

so all of obama's term as president is either a credit to, or the fault of, W? well that's ... a novel way of looking at presidential politics

Obviously I didn't say or imply any such thing. We were discussing "this mess" not "all of obama's term as president". I mean to suggest there would still be "this mess" (or worse) no matter who had been president for the last four years. Of course that is just my opinion, and not the portion of my post I thought it would be worthwhile to focus on. You obviously disagreed.

Quote

so it appears this is a case of the battling economists and, as noted above, it depends on to which authority one appeals (as do most things), usually based on one's political philosophy and leanings... one thing's for sure: whoever we quote/believe, those people know far more about this than any of us posting here

Wikipedia:
"[The Tax Foundation']s website states that journalists should describe it as: "a nonpartisan tax research group", though it has been described as having a "pro-business leaning" and it has ties to various conservative groups."
"The Tax Foundation has received funding from ExxonMobil and from conservative political groups such as the Koch Family Foundations, the Earhart Foundation, and Citizens for a Sound Economy."

This whole "you have a source, I have a source, it all depends who you believe" is silly. Please see my post 278. It's just like the whole global warming debate. Can you find a single non-partisan source (not just a source that calls themselves that) who believe any such thing?

I just read that paper. I have never seen so many apologies for so many assumptions being made. It was definitely right about one thing though. "Much of the current controversy has arisen because the Romney proposal is not fully articulated, and therefore analysts can disagree about what kinds of tax preferences would be eliminated." In other words "no one including myself even knows what I am analyzing."

[mike777]

"I really don't understand what impact lowering tax rates is supposed to have on job creation"

I am not a macroeconomist but I would think lowering or raising taxes, some type of tax, would have some effect on economic activity which would have some effect on job creation.

If not then perhaps there is a moral argument for lowering or cutting taxes.

[BunnyGo]

lalldonn, on 2012-October-05, 16:17, said:

I guess anything might depend who you ask. For example, the CBO and factcheck.org would tell you that the Bush tax cuts caused revenues to decline. So would the Tax Policy Center. Otherwise, I can locate several liberal sources that claim the Bush tax cuts caused federal revenue to decrease (Citizens for Tax Justice) and conservative sources that say the cuts caused federal revenue to increase (Washington Times).

So yes, it depends who you ask. Ask a conservative source you get one answer, ask a liberal or non-partisan source and you get a different answer. I have observed that phenomenon to be a common theme on a number of issues.

Facts have a well known liberal bias.

[hrothgar]

mike777, on 2012-October-05, 23:50, said:

Ok waited for someone else to say this but noone..so I will


Blame macroeconomists for not telling us what the clear, clear answer to this is.

Mike, almost all macro economists agree that the stimulus program significantly decreased the depth of the Great Recession.

Even when economists give a "clear clear answer" you don't believe what they have to say.

[mike777]

For the record I certainly dont disagree with what most if not all macroeconomists agree on but am glad to hear they agree.

I have never really been a deficit hawk though 16 trillion and counting does get my attention.


btw in discussing tax rates I think it is important to focus on just what is being taxed. For example defining earned income or taxable income is difficult and constantly changing.

So at least in theory it is possible to lower marginal tax rates, redefine earned income and increase revenue.

[blackshoe]

PassedOut, on 2012-October-06, 16:31, said:

If Romney wins, he won't be responsible for the portion of the budget that he does not change, but he will be responsible for any changes that he makes -- just as Obama is responsible for the $140 billion of additional spending that he added to the last Bush budget. Of the $1.4 trillion deficit from Bush's final budget year, you have to lay $140 billion at Obama's feet.

Technically, he didn't add the spending to the budget, because budgets are plans made in advance. What he did was to spend $140 billion more than the budget expected. And yes, he is thus responsible for that 10% of that fiscal year's deficit.

Hm. If a budget is approved, and the President does not ask for authority to spend additional funds, but Congress passes a bill authorizing such spending, should the President veto that bill? I would say "not in an emergency, but otherwise yes". I would also say that if the President asks for authority to spend additional funds over what is already authorized in the approved budget, absent a bona fide emergency he better have a damn good reason, or Congress should not give him that authority.