Author Topic: Tax Policy  (Read 235125 times)

DougMacG

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Flashback in our Tax Policy thread:
« Reply #850 on: March 11, 2019, 09:21:50 AM »
https://dogbrothers.com/phpBB2/index.php?topic=1791.msg107524#msg107524
...
[GDP Growth] According to the CBO, every 0.1 percent increase in the gross domestic product adds over $250 billion in revenue over 10 years.
http://www.foxnews.com/opinion/2017/11/30/tax-reform-is-on-track-and-democrats-want-to-derail-it-dont-believe-these-myths-about-senate-s-bill.html
https://www.wsj.com/articles/tax-reform-growth-and-the-deficit-1511730170?mod=wsj_review_&_outlook
...
0.6 growth increase in GDP pays for the entire tax package.
...
Nine prominent economists write to support the package writing that the corporate reform alone will grow the economy by at least 2% annually, economics professors from Harvard, Stanford and former chairs of the council of economic advisers:
https://www.wsj.com/articles/how-tax-reform-will-lift-the-economy-1511729894
...
If we had reformed the corporate tax code sooner we could have prevented 4600 companies and hundreds of billions of dollars from leaving the US.
https://www.bloomberg.com/news/articles/2017-09-19/tax-code-hurts-u-s-firms-in-m-a-market-roundtable-study-finds

https://dogbrothers.com/phpBB2/index.php?topic=1791.msg107767#msg107767
WSJ: Tax cuts are going to grow the economy by much more than expected
https://www.wsj.com/articles/get-ready-for-next-years-big-tax-stimulus-1513593000

https://dogbrothers.com/phpBB2/index.php?topic=1791.msg108018#msg108018
tax reform bill, which cut the corporate rate from 35% to 21% will create jobs, boost incomes and spur competition in America."
"You're going to see more people coming back into the workforce, you're going to see wage increases like we want."
"I'm kind of surprised to see people saying an uncompetitive tax system would be good for America."
"...over time that retained capital will be used to grow businesses, R&D, hire people, wages, competition and over time that will be very good for America."
"The number one thing for jobs is a healthy and vibrant economy, which drives jobs and wages. The competitive tax system, proper smart regulation, cutting some of the bureaucracy, those will help jobs."

https://dogbrothers.com/phpBB2/index.php?topic=1791.msg108120#msg108120
More than 90% of economists said the tax cuts would increase GDP growth over the next two years.

https://dogbrothers.com/phpBB2/index.php?topic=1791.msg108150#msg108150
Doug Jan 11, 2018:  "Maybe Apple will come to the US someday too!"
CNBC Jan 17, 2018: "It looks like Apple is bringing back home nearly all of its $250 billion in foreign cash"

https://dogbrothers.com/phpBB2/index.php?topic=1791.msg108393#msg108393
"the total tax package will create extra GDP growth of 1.1% a year through 2019"

One side was right.  One side was wrong.  Are there electoral consequences?  Not if the media can brush it all away.

Crafty_Dog

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Re: Tax Policy
« Reply #851 on: March 11, 2019, 04:52:57 PM »
Great work there Doug!

Crafty_Dog

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Wesbury: Buybacks are not the problem!
« Reply #852 on: March 18, 2019, 01:38:16 PM »
Buybacks Aren't the Problem! To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 3/18/2019

The environment on Capitol Hill has made populism a bipartisan affair, with Republican Senator Marco Rubio now joining the fray with a call to tax corporate stock buybacks.

His argument? Corporations are buying back stock instead of making productive investments. He's not alone in arguing that weak investment is the reason the economy isn't growing faster. Meanwhile others argue the corporate tax cut of 2017 fell flat as tax savings went towards a surge in buybacks, not investment.

Rubio also bemoans that stock buybacks face a lower tax rate than dividends. But qualified dividends (which are the vast majority of dividends paid by public companies) are taxed at the same rate as capital gains, so we're not quite sure how he comes to this conclusion.

Let's break down the issues with his argument. To start, companies have been investing. Think about it. If companies were under-investing, there would be shortages, and that is simply not the case.

Another reason his argument fails scrutiny – and probably the most common misperception when it comes to corporate investments – is that people mistake nominal investment for real investment.

The price of technology has fallen dramatically while its capabilities have surged. You can buy a smartphone or tablet today for hundreds of dollars, while just a decade ago those embedded technologies would have cost millions of dollars (and required a suitcase to lug around). Airlines can now book passengers using an App instead of a ticket office. Brick and mortar stores are being replaced by logistics software and delivery vehicles. A decade ago it took more than two months to frack a well, now it takes two weeks.

In other words, the price of production is falling while profit margins have improved. The declining costs for improved performance make it appear that companies aren't investing, when in reality they are. In fact, productivity at the corporate level is booming, and that's exactly why corporations can return so much capital to shareholders. On a nominal basis, business investment was 13.7% of GDP in the last quarter of 2018, exactly where it was in 2001 and 2008. But on a real basis (where inflation – or in the case of technology, deflation -is accounted for), business investment was 14.7% of GDP, the highest on record.

It's this lack of perspective that has people pining for the past. And it makes no sense. If it took longer to frack a well, companies needed office space to sell airline tickets, or we had no online retail, then yes, investment would be higher, but then profits would be lower. But we guess Rubio's "problem" would be fixed, as companies wouldn't have the profits for stock buybacks or dividends.

Now to address the second misperception. Both buybacks and dividends reduce cash on corporate balance sheets. As economist John Cochrane has explained, a buyback does not necessarily leave a remaining shareholder in a better position. Let's say a company has two shares in circulation, $100 in cash, and assets capable of producing future profits worth $100 today. Each of the two shares should be worth $100. If the cash is used to buy back one share, there would only be one share remaining and $100 in future profits, so the share should still be worth $100. If the company paid a dividend of $100 ($50 per share), the price of each share would fall from $100 to $50, creating a capital loss of $50. If the shareholder took the loss it would offset the tax on the dividend. Either way, the government captures zero dollars.

Simple math says that, either way, profits for shareholders and tax receipts should not be different as long as capital gains and dividends are taxed equally. And if a politician believes one is taxed less than the other, we think that politician should find a way to reduce the higher tax rate, not raise the lower one. Cutting tax rates is the best way to boost incentives for work, savings and investment.

Finally, the government has proven itself a terrible fiduciary. In 2017, after eight years of economic recovery, and before the Trump corporate tax cut went into effect, the budget deficit was $680 billion. Even John Maynard Keynes must have been rolling over in his grave. So, why would anyone trust government to start telling private citizens what to do with their own money?

G M

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Re: Tax Policy
« Reply #853 on: March 18, 2019, 05:12:00 PM »
If congress would stop trying to pick winners and losers by screwing with the tax laws, we would all be better off. But, that would mean less opportunities for graft.

DougMacG

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Tax Policy, France already tried the super tax on the top 1%
« Reply #854 on: April 04, 2019, 09:03:31 AM »
https://www.forbes.com/sites/jonhartley/2015/02/02/frances-75-supertax-failure-a-blow-to-pikettys-economics/#83b36d85df26
[Article is from Feb 2015.]

Hollande's 75% 'Supertax' Failure A Blow To Piketty's Economics

France has said goodbye to its infamous 75% income tax on individuals earning more than 1 million euros this past weekend, returning to a top marginal income tax rate of 45%. The change, effective February 1, is a blow to the French Socialist party’s signature redistribution measure, the same remedy supported by popular French economist Thomas Piketty who predicted that “lots of other countries will inevitably follow this route.” To be precise, Piketty and his frequent co-author Emmanuel Saez recently argued for an even higher 80% levy on high earner income in an op-ed for The Guardian.

France’s 75% ‘supertax’ reduced government tax revenues through hindered economic growth and capital flight.

Most memorably, the French supertax famously compelled French actor Gerard Depardieu to become a Russian citizen and relocate to Moscow for tax reasons. Notwithstanding, this trend of emigration persisted at the macro level as an estimated 2.5 million French citizens now live abroad in the U.K., Belgium and other countries sporting more competitive income tax rates.

As a result of a reduced labor supply and discouraged investment in France following the 75% top marginal income tax rate announced in September 2012, French revenues for 2013 came in at only 16 billion euros, a 14 billion euro shortfall below the French government’s expected 30 billion in tax collections.

Compared to initial estimates from the French government using models which ignore the Laffer Curve’s “slippery slope,” tax revenues from corporate taxes, individual income tax, and value-added tax (VAT) were down by 6.4 billion, 4.9 billion, and 5 billion euros respectively.

In 2014, the French economy continued its stagnation as the economy has failed to post a single quarter of annualized GDP growth above 0.8% since Hollande took office in 2012 and implemented his 75% supertax shortly after. France’s unemployment rate still sits around 10%. The French government also conceded that the country will most likely fail to meet its deficit target of 3.8% of GDP in 2014 and may not do so until 2017 with tax revenues projected to continue their decline.

France’s 75% ‘supertax’ illustrates the effects of the Laffer curve

The French 'supertax' perfectly illustrates the Laffer curve’s depiction of diminishing government revenues at high tax rates. Piketty and his co-authors have forgotten the power of an old idea, which recently turned 40 as Heritage Foundation chief economist Stephen Moore observed in The Washington Post.

France’s experience with its 75% supertax and declining tax revenues also confirms recent research on the Laffer curve by Federal Reserve Bank of St. Louis and Georgetown economists that estimates the tipping point where higher tax rates cause declining tax revenues begins at a 52% marginal tax rate. Another recent paper by University of Chicago professor Harald Uhlig and Federal Reserve Board of Governors economist Mathias Trabandt estimate this critical tax rate lies somewhere in the 50-65% range for European countries including France.

With the 75% supertax scrapped, the top marginal income tax rate in France will now be 45%. Indeed, France will now return to the tax rates of former French President Nicolas Sarkozy, Holland’s predecessor, who had established a tax ceiling of 50% of earnings.

The French wealth tax endorsed by Piketty has spurred tax evasion and capital flight

France also enforces a Piketty supported wealth tax on French residents and non-residents who have assets in France. French economist Eric Pichet in a recent academic paper has found evidence of capital flight as a consequence of the French wealth tax, namely, that it has cut French GDP growth by 0.2% per year. The paper suggests that when an individual country implements a wealth tax, it incentivizes people to stash their wealth in tax havens and invest abroad.

Similarly, University of Toronto economist David Seim in a recent paper finds that Sweden’s wealth tax, which was abolished in 2007, spurred significant tax evasion and capital flight as well.

More constructive policies that reduce inequality and promote economic growth

This past week, Berkeley Professor Emmanuel Saez updated his famous income inequality graph showing top 1% pre-tax incomes surging since 1970, which has drawn a number of headlines, including an in-depth article from The Upshot at The New York Times by Justin Wolfers.

A growing number of conservatives, in addition to liberals, have begun to address inequality in a serious tone taking an approach to resolve the issue by building up the poor and middle-class rather than an approach focused on thwarting the wealthy embodied in France's 75% 'supertax'. Constructive “bottom-up” policies that can improve outcomes for the bottom 99% include expanding the Earned Income Tax Credit (EITC) and encouraging stock ownership.

Improvements streamlining auto-enrollment in retirement plans, increased use of incentive pay plans enabling employees to share in company profits, and reduced taxes for employee stock ownership plans are all examples that would increase capital income for the bottom 99%.

Bill Gates has even weighed in on Piketty's thesis, suggesting that policymakers instead move away from income, wealth, and capital gains taxes in favor of progressive consumption taxes to avoid penalizing wealthy individuals who are focused on philanthropy and investment in the economy.

The U.S. and other advanced economies should take note that trying to thwart the wealthy like France did with its top-down 75% supertax has failed and that the real path to reducing inequality lies in creating bottom-up pro-growth strategies.

ccp

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Thanks Donald
« Reply #855 on: April 05, 2019, 06:24:20 PM »
Got screwed this yr on taxes
not surprised though

I know people who pay nothing in taxes who get money back in child credits

Thanks Wall Street fuckers and Trump
you people made out like bandits

I am not rich but continue to be assessed every yr more and more for being a mid level professional.






DougMacG

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Keith Richards on Tax Policy
« Reply #856 on: April 07, 2019, 09:49:57 AM »
Speaking of Mick coming to US for healthcare, here is Keith on tax policy:

"The whole business thing is predicated a lot on the tax laws…It’s why we rehearse in Canada and not in the U.S. A lot of our astute moves have been basically keeping up with tax laws, where to go, where not to put it. Whether to sit on it or not. We left England because we’d be paying 98 cents on the dollar. We left, and they lost out. No taxes at all."
   - Keith Richards, Rolling Stones
http://www.you.com.au/news/1253.htm


Crafty_Dog

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Re: Tax Policy
« Reply #857 on: April 07, 2019, 11:36:58 PM »
 :-D :-D :-D :evil: :evil: :evil: 8-) 8-) 8-)

DougMacG

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Re: Tax Policy
« Reply #858 on: April 08, 2019, 08:05:17 AM »
:-D :-D :-D :evil: :evil: :evil: 8-) 8-) 8-)

I am involved in a discussion with a younger generation member who believes tax rates can be higher because at least some rich people don't need the money.  No amount of evidence seems to persuade that rich actually respond even more sensitively to tax rates than regular working people.

In tax policy, people point to the exception and think it is the rule, or want to make the rule to address the exception.  We know of a rich person who we believe could be taxed way more and would still be fine, second generation wealth for example and a lot of them agree and support higher tax rates and liberal policies.  I contend that doesn't work on the macro scale.  You can't target a higher tax on idle rich people  and not hit the productive class, the entrepreneurs, the innovators, the investors, the risk takers, the employers and the future employers, and therefore harm the employees, the young, minorities and the economy as a whole.

The Rolling Stones make a good example.  Do they need to work, do they have to work, do they need more money, do they even do it for the money?  I don't know, but mostly no.  They do it because that is what they do.  Like the rest of us they are aging and want to keep doing what the do at the highest level they can for as long as they can.  Like others at the top of their profession, whether you like their music or not, they are driven in their pursuit of being the best.

When bands like the Stones, the Beatles, the Dead, Prince, etc get screwed by a ticket company or a record company, they start their own.  When an agent takes 10% and does nothing, they fire him, not because they need the money but because of the money and the principle of not getting value for what you are paying for.  When their country of origin for a global enterprise screws or penalizes the successful on the taxation on their revenues, they organize differently and move operations elsewhere, just like Pillsbury, Medtronic and 3M did in moving operations out of our area.  The Founder of Ikea fled the high tax rates of Sweden, as did all the top tennis players during the highest tax rate years, Bjorn Borg, Stefan Edberg, Mats Wilander. Did they need the money?  Probably not, but they can and do respond to incentives and disincentives in the same way we might respond to prices buying groceries or gas or making a job change.

There is a point in taxation where charging a higher rate doesn't bring in higher revenues and it has been proven over and over and over, around the world and throughout history.

ccp

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Re: Tax Policy
« Reply #859 on: April 08, 2019, 08:35:47 AM »
"The Rolling Stones make a good example.  Do they need to work, do they have to work, do they need more money, do they even do it for the money?  I don't know, but mostly no.  They do it because that is what they do.  Like the rest of us they are aging and want to keep doing what the do at the highest level they can for as long as they can.  Like others at the top of their profession, whether you like their music or not, they are driven in their pursuit of being the best."

colleague of mine in the early 90s i Florida saw Mick Jagger walk in office with a sore throat prior to local concert
doctor offered to see jagger for free but he responded he has more money than he knows how to spend in several lifetimes
so the doctor took free backstage tickets as payment

I may have told this story , if a repeat myself my apologies in my old age.

ccp

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Re: Tax Policy
« Reply #860 on: April 08, 2019, 08:40:12 AM »
as for my taxes my accountant says my rates went up 2 % though my effective tax rate is down.
the change in policy stopping people from deducting state income tax was the difference.  My state tax is not huge but enough to be annoying.
overall I am glad the tax laws did this because it is clear that red blue states should not dump on the red states because they rob their populations.

OTOH I don't know why my bracket is the ONLY one that did not get a tax break or even just stay even

My group always gets screwed.
Not rich but well to do and ALWAYS taken for granted by crats and cans alike


DougMacG

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Re: Tax Policy
« Reply #861 on: April 08, 2019, 10:46:10 AM »
as for my taxes my accountant says my rates went up 2 % though my effective tax rate is down.
the change in policy stopping people from deducting state income tax was the difference.  My state tax is not huge but enough to be annoying.
overall I am glad the tax laws did this because it is clear that red blue states should not dump on the red states because they rob their populations.

OTOH I don't know why my bracket is the ONLY one that did not get a tax break or even just stay even

My group always gets screwed.
Not rich but well to do and ALWAYS taken for granted by crats and cans alike

ccp, Thanks for following up on this.  I'm glad to hear your overall tax (effective tax rate) went down slightly.  If your bracket (marginal rate) went up 2%, that is bad for incentives.  I wanted to ask a few questions and try to study it.  The situation you are in, or at least the perception of it, I think is what cost Republicans the House, along with the healthcare mess.  The 10k limit (SALT) in swing districts in prosperous suburbs in blue states where the combination of state income taxes and high property taxes are more than that made a lot of people angry.  That is partly good but was poorly executed, poorly messaged and cost R's the House and all legislative momentum.

30 communities in NJ have median property taxes of 15-30k.  Median! 
https://www.nj.com/politics/2018/08/nj_towns_with_the_highest_tax_rates.html
Trust me, all  these people are pissed about tax reform even if a few voted R anyway.

Keeping personal info out of it, we should study what happened at some different income levels in high tax states.  Time permitting I would like to come back to this with some math. 

In the first analysis I think we can safely say that in 2020 these same people will have a choice between keeping the lousy Trump/Republican plan or electing something far worse.

Here is the trap for Democrats:  To fix the Republican plan they need to cut taxes on the rich!  What say Bernie and the gang on that?  I say watch for the House to flip back and for the Trump boom to expand.

DougMacG

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Re: Tax Policy
« Reply #862 on: April 08, 2019, 10:54:33 AM »
...
colleague of mine in the early 90s i Florida saw Mick Jagger walk in office with a sore throat prior to local concert
doctor offered to see jagger for free but he responded he has more money than he knows how to spend in several lifetimes
so the doctor took free backstage tickets as payment

My neighbor had the warm up band for the Stones play at his house when they were in town.  He bartered dental work and they played free on the lakeshore for his wife's 50 B'Day party.  Band members always need dental work. 

The IRS missed out on taxable events in both stories.

« Last Edit: April 08, 2019, 10:56:45 AM by DougMacG »

ccp

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Re: Tax Policy
« Reply #863 on: April 09, 2019, 04:05:30 PM »
Why give different tax reductions to different brackets?
seem plain stupid and unnecessarily confusing .

Why could the cans (who never fail to botch it up) simply give a 15 % cut across the board for anyone that pays?

In any event I still am of the opinion we will never see another tax cut in our life times




DougMacG

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Re: Tax Policy
« Reply #864 on: April 09, 2019, 07:31:48 PM »
"Why could the cans (who never fail to botch it up) simply give a 15 % cut across the board for anyone that pays?"

Because opponents call that a"giveaway" to the rich.

ccp

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Re: Tax Policy
« Reply #865 on: April 10, 2019, 04:51:40 AM »
"Why could the cans (who never fail to botch it up) simply give a 15 % cut across the board for anyone that pays?"

Because opponents call that a"giveaway" to the rich."

But those who make 1/2 million per yr get 6.5 % break.  Those in lowest got 0:

https://www.kdpllp.com/2017-vs-2018-federal-income-tax-brackets/

The only real fair way is everyone gets same % change.  But fair is not the legislative way.  Picking and choosing how to wield power selectively is .



DougMacG

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Re: Tax Policy
« Reply #866 on: April 10, 2019, 06:23:30 AM »
"Why could the cans (who never fail to botch it up) simply give a 15 % cut across the board for anyone that pays?"

Because opponents call that a"giveaway" to the rich."

But those who make 1/2 million per yr get 6.5 % break.  Those in lowest got 0:

https://www.kdpllp.com/2017-vs-2018-federal-income-tax-brackets/

The only real fair way is everyone gets same % change.  But fair is not the legislative way.  Picking and choosing how to wield power selectively is .

1.  "But fair is not the legislative way."   And you won't like their definition of fair.

2.  "The only real fair way is everyone gets same % change."  That was the strategy employed by Reagan.  "Across the board" rate cuts overcame their cries of giveaway.  Leftists have deepened their fight since then.  They know same percentage cut for the wealthier is a MUCH bigger cut in dollars and they own the messaging.

3.  The deficit.  You are at the level where the real money is paid and collected.  A big rate cut where the taxes are really paid is partly recovered by growth elsewhere and growth gradually over a longer term.  Doctors salaries don't just go up instantly and automatically to recover the revenue.  There is a point in tax cutting where we actually need to spend less in order to truly pay less.  Because rate cuts did increase growth and employment, and unemployment shrunk and millions got off of food stamps since Obama, you would think federal spending would also shrink.  Unfortunately not so.

4.  There is one group in American that is not paying their fair share of the taxes - the poor.  Besides spending less or taxing the rich more, the other way you get more revenues is to collect more from the two hundred million or so who currently pay nothing in federal individual income taxes.  Because of the political success of 'progressive' taxation,  anything that addresses this directly is dead on arrival, for example the flat tax.  Tax every dollar earned at the same rate up and down the income economy;make up the 'fairness' only on the spending side.  But the argument for redistribution in the tax code already won.  The only way conservatives can cut rates for all is to cut more at the lower levels.  Even when they do that they get accused of the opposite, see 2018.  The way around this conundrum is prosperity.  Make the poor no longer poor, no longer dependent and no longer riding for free.
« Last Edit: April 10, 2019, 06:30:54 AM by DougMacG »

Crafty_Dog

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Re: Tax Policy
« Reply #867 on: April 10, 2019, 01:24:48 PM »
Also to keep in mind:  Debt is a tax on future generations a.k.a. taxation without  representation.

DougMacG

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Tax Policy, Charlie Gibson, candidate Barack Obama and Capital Gains taxes
« Reply #868 on: April 12, 2019, 08:28:55 AM »
Making sure this quote is accessible in the tax thread, the only good question the msm ever asked Barack Obama, and his debate gaffe answer that should have ended his candidacy.  Luckily for Obama, McCain was no brighter than him on taxation.

https://taxfoundation.org/obama-and-gibson-capital-gains-tax-exchange/
https://www.youtube.com/watch?v=gJimLZRC9N8

CHARLIE GIBSON, ABC, April 16, 2008: All right. You have, however, said you would favor an increase in the capital gains tax. As a matter of fact, you said on CNBC, and I quote, “I certainly would not go above what existed under Bill Clinton,” which was 28 percent. It’s now 15 percent. That’s almost a doubling, if you went to 28 percent.

But actually, Bill Clinton, in 1997, signed legislation that dropped the capital gains tax to 20 percent.

OBAMA: Right.

GIBSON: And George Bush has taken it down to 15 percent.

OBAMA: Right.

GIBSON: And in each instance, when the rate dropped, revenues from the tax increased; the government took in more money. And in the 1980s, when the tax was increased to 28 percent, the revenues went down.

So why raise it at all, especially given the fact that 100 million people in this country own stock and would be affected?

OBAMA: Well, Charlie, what I’ve said is that I would look at raising the capital gains tax for purposes of fairness.

RAISE TAX RATES FOR WHAT??!!  After 4 years as US Senator and 8 years as President he still doesn't know that punishing capital hurts labor.  We live in an interconnected economy and those two parts, capital and labor, are directly connected.

Crafty_Dog

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Re: Tax Policy
« Reply #869 on: April 12, 2019, 01:51:45 PM »
To be precise the way I remember it he openly stated he was for the higher rate even if it produced lower revenues.


DougMacG

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Tax Revenues 2015 2016 2017 2018 2019 2020
« Reply #871 on: April 15, 2019, 07:53:13 AM »
FY 2020 - $3.64 trillion, budgeted.
FY 2019 - $3.44 trillion, estimated.
FY 2018 - $3.33 trillion.
FY 2017 - $3.32 trillion.
FY 2016 - $3.27 trillion.
FY 2015 - $3.25 trillion
https://www.thebalance.com/current-u-s-federal-government-tax-revenue-3305762

With the doubling of the child tax credit and the largest percentage tax rate cuts going to the working poor and middle class, do these numbers that go up at a faster rate after tax reform than before look like the rich are paying in $200,000 less each in taxes?  (Brookings, Bloomberg allegation)  Utter nonsense.

Like under Reagan, it is a BIG deal for the economy to take in more revenue at lower rates.  It means income increased more than rates decreased.  Who f*cking knew.  Did ANYONE predict this?
« Last Edit: April 15, 2019, 08:37:39 AM by DougMacG »

DougMacG

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https://www.bloomberg.com/news/articles/2019-04-12/the-tax-law-s-big-winner-is-the-millionaire-ceo?srnd=businessweek-v2
----------------------------------

They use static analysis to get their desired negative result.  The truth is the opposite IMHO.  Lowest jobless claims in a half century and millions off of food stamps is helping the poor more than tax savings is helping the rich.  Going from no job to job, or on food stamps to off food stamps is a much bigger gain than a dollar savings to the rich,being able to buy the latest Tesla versus driving another year on last year's luxury car or whatever gain they think the rich obtain with tax savings.

Note the irony, rates were lowered the least for the rich.  Then with predictable certainty Brooking and Bloomberg formulate the results in a way to say they were cut the most.

Take a look at this misleading statement:
"The top 0.1 percent, who make more than $3.4 million a year (half the top 0.1% make less), saved the same amount in percentage terms as the average Joe (no they didn't), but in dollar terms made out with $193,380." (No they didn't)

   - False in so many ways.  They are converting percentage to dollars by assuming the changes to incentives had no effect on people's behaviors and we already know that is false.  That is denial of science.  The change in behavior because of the reduced disincentives is the purpose of the tax rate reductions and it worked.  If these incomes mostly went up because of making our business taxation competitive with the rest of the world, then these top earners most likely paid more in dollars in taxes, not less.  Bringing in more dollars to the Treasury is a BFD when you are running deficits in the hundred of billions, carrying debt in the tens of trillions and have unlimited demand for new programs and greater spending.

They go right on to refute their own premise:
"As Republicans floated their proposal for a massive cut to the corporate tax rate, from 35 percent to 21 percent, investors began buying corporate shares in anticipation of its passing, says Todd Castagno, an analyst for Morgan Stanley. “Ultimately, investing in stocks is buying future earnings,” he says, and lower taxes mean better quarterly numbers."

   - In other words, investors invest more in a more conducive climate.  And employers employ more in a more conducive climate.  And that is somehow bad?  In what universe?  Should we have government steer those prescient investments to poor people?

" “Corporate shareholders made out like bandits,” says Steven Rosenthal, senior fellow at the Tax Policy Center. "

   - Corporate share holders are taxed 4 times on that income, at the corporate federal, corporate state, individual federal and individual state levels, not counting all the taxes we pay with our after tax income.  A news agency owned by a New York multi-billionaire doesn't know that??!

"If our rich person invests in property in a “qualified opportunity zone,” a designation created by the new tax law to encourage investment in low-income areas, he’ll be able to avoid some capital-gains taxes and defer the rest for years. "

   - I oppose these laws but who benefits most, a rich person gains some government intended dollar gain of a poor community that previously had no jobs in the community gaining a major employer? 

"Many opportunity zones are indeed in low-income areas, but others include fast-gentrifying neighborhoods such as Long Island City in Queens, N.Y., where the developer stands to make a much larger return."

   - If opportunity zones are a bad idea or poorly placed, reform the law, repeal the law, redraw the map.  Good grief, what does that have to do with analysis of this tax reform?  These "loopholes" come from the same people trying to micromanage the economy with the tax code, and lowering tax rates makes loopholes less desirable, not more. 

"As Trump’s signature legislative achievement made its way through Congress, Mnuchin asked his staff to run the numbers over and over, reacting with disappointment every time they showed a huge benefit for the wealthy, says Trier, who left the government in February 2018. “I personally don’t think he was the most competent tax policy leader in the world,” he says of Mnuchin. “But the one thing for sure is he was not out to benefit the rich.” "

   - Don't they know they are exposing their own fallacy.  There is no pro-growth reform in a system where the rich already pay most of the taxes that doesn't involve the rich getting a break, if their failed static analysis is the criteria.

Back to the point of this, the nation gets more income, more jobs, and more tax revenue in a high growth economy and we were most certainly stuck before tax reform in a stagnant / low growth economy.  The poor, the minorities and the most difficult to employ benefit the most from the reforms.  They oppose this.  Why?

DougMacG

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Tax Policy - France tried the 75% tax rate, it didn't work.
« Reply #873 on: April 16, 2019, 07:29:33 AM »
Article from Feb 2015, but the Left forgets its lessons rather quickly:
https://www.forbes.com/sites/jonhartley/2015/02/02/frances-75-supertax-failure-a-blow-to-pikettys-economics/#15a5a7665df2

Feb 2, 2015
Hollande's 75% 'Supertax' Failure A Blow To Piketty's Economics
 
France has said goodbye to its infamous 75% income tax on individuals earning more than 1 million euros this past weekend, returning to a top marginal income tax rate of 45%. The change, effective February 1, is a blow to the French Socialist party’s signature redistribution measure, the same remedy supported by popular French economist Thomas Piketty who predicted that “lots of other countries will inevitably follow this route.” To be precise, Piketty and his frequent co-author Emmanuel Saez recently argued for an even higher 80% levy on high earner income in an op-ed for The Guardian.

France’s 75% ‘supertax’ reduced government tax revenues through hindered economic growth and capital flight

Most memorably, the French supertax famously compelled French actor Gerard Depardieu to become a Russian citizen and relocate to Moscow for tax reasons. Notwithstanding, this trend of emigration persisted at the macro level as an estimated 2.5 million French citizens now live abroad in the U.K., Belgium and other countries sporting more competitive income tax rates.

As a result of a reduced labor supply and discouraged investment in France following the 75% top marginal income tax rate announced in September 2012, French revenues for 2013 came in at only 16 billion euros, a 14 billion euro shortfall below the French government’s expected 30 billion in tax collections.

Compared to initial estimates from the French government using models which ignore the Laffer Curve’s “slippery slope,” tax revenues from corporate taxes, individual income tax, and value-added tax (VAT) were down by 6.4 billion, 4.9 billion, and 5 billion euros respectively.

In 2014, the French economy continued its stagnation as the economy has failed to post a single quarter of annualized GDP growth above 0.8% since Hollande took office in 2012 and implemented his 75% supertax shortly after. France’s unemployment rate still sits around 10%. The French government also conceded that the country will most likely fail to meet its deficit target of 3.8% of GDP in 2014 and may not do so until 2017 with tax revenues projected to continue their decline.

The French 'supertax' perfectly illustrates the Laffer curve’s depiction of diminishing government revenues at high tax rates. Piketty and his co-authors have forgotten the power of an old idea, which recently turned 40 as Heritage Foundation chief economist Stephen Moore observed in The Washington Post.

France’s experience with its 75% supertax and declining tax revenues also confirms recent research on the Laffer curve by Federal Reserve Bank of St. Louis and Georgetown economists that estimates the tipping point where higher tax rates cause declining tax revenues begins at a 52% marginal tax rate. Another recent paper by University of Chicago professor Harald Uhlig and Federal Reserve Board of Governors economist Mathias Trabandt estimate this critical tax rate lies somewhere in the 50-65% range for European countries including France.

With the 75% supertax scrapped, the top marginal income tax rate in France will now be 45%. Indeed, France will now return to the tax rates of former French President Nicolas Sarkozy, Holland’s predecessor, who had established a tax ceiling of 50% of earnings.

The French wealth tax endorsed by Piketty has spurred tax evasion and capital flight

France also enforces a Piketty supported wealth tax on French residents and non-residents who have assets in France. French economist Eric Pichet in a recent academic paper has found evidence of capital flight as a consequence of the French wealth tax, namely, that it has cut French GDP growth by 0.2% per year. The paper suggests that when an individual country implements a wealth tax, it incentivizes people to stash their wealth in tax havens and invest abroad.

Similarly, University of Toronto economist David Seim in a recent paper finds that Sweden’s wealth tax, which was abolished in 2007, spurred significant tax evasion and capital flight as well.

More constructive policies that reduce inequality and promote economic growth

This past week, Berkeley Professor Emmanuel Saez updated his famous income inequality graph showing top 1% pre-tax incomes surging since 1970, which has drawn a number of headlines, including an in-depth article from The Upshot at The New York Times by Justin Wolfers.

A growing number of conservatives, in addition to liberals, have begun to address inequality in a serious tone taking an approach to resolve the issue by building up the poor and middle-class rather than an approach focused on thwarting the wealthy embodied in France's 75% 'supertax'. Constructive “bottom-up” policies that can improve outcomes for the bottom 99% include expanding the Earned Income Tax Credit (EITC) and encouraging stock ownership.

Improvements streamlining auto-enrollment in retirement plans, increased use of incentive pay plans enabling employees to share in company profits, and reduced taxes for employee stock ownership plans are all examples that would increase capital income for the bottom 99%.

Bill Gates has even weighed in on Piketty's thesis, suggesting that policymakers instead move away from income, wealth, and capital gains taxes in favor of progressive consumption taxes to avoid penalizing wealthy individuals who are focused on philanthropy and investment in the economy.

The U.S. and other advanced economies should take note that trying to thwart the wealthy like France did with its top-down 75% supertax has failed and that the real path to reducing inequality lies in creating bottom-up pro-growth strategies.

« Last Edit: April 16, 2019, 07:31:13 AM by DougMacG »

DougMacG

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Tax Policy: NYT: YOU probably got a tax cut!
« Reply #874 on: April 16, 2019, 09:59:22 AM »
https://www.nytimes.com/2019/04/14/business/economy/income-tax-cut.html
If you’re an American taxpayer, you probably got a tax cut last year. And there’s a good chance you don’t believe it. Ever since President Trump signed the Republican-sponsored tax bill in December 2017, independent analyses have consistently found that a large majority of Americans would owe less because of the law. Preliminary data based on tax filings has shown the same. Yet as the first tax filing season under the new law wraps up on Monday, taxpayers are skeptical. A survey conducted in early April for The New York Times by the online research platform SurveyMonkey found that just 40 percent of Americans believed they had received a tax cut under the law. Just 20 percent were certain they had done so. That’s consistent with previous polls finding that most Americans felt they hadn’t gotten a tax cut, and that a large minority thought their taxes had risen — though not even one in 10 households actually got a tax increase.
(more at link)
--------------------------------
If your taxes went up, you are in a less than one in ten unique tax situation.

All of this misses the point.  Your static scoreboard does not answer who benefits from a growing US economy?  (all of us, especially the disadvantaged)  Policies of Trump roughly doubled the growth rate.

https://tradingeconomics.com/united-states/gdp-growth-annual

G M

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Re: Tax Policy: NYT: YOU probably got a tax cut!
« Reply #875 on: April 16, 2019, 02:38:15 PM »
I certainly payed much less. It was very nice.


https://www.nytimes.com/2019/04/14/business/economy/income-tax-cut.html
If you’re an American taxpayer, you probably got a tax cut last year. And there’s a good chance you don’t believe it. Ever since President Trump signed the Republican-sponsored tax bill in December 2017, independent analyses have consistently found that a large majority of Americans would owe less because of the law. Preliminary data based on tax filings has shown the same. Yet as the first tax filing season under the new law wraps up on Monday, taxpayers are skeptical. A survey conducted in early April for The New York Times by the online research platform SurveyMonkey found that just 40 percent of Americans believed they had received a tax cut under the law. Just 20 percent were certain they had done so. That’s consistent with previous polls finding that most Americans felt they hadn’t gotten a tax cut, and that a large minority thought their taxes had risen — though not even one in 10 households actually got a tax increase.
(more at link)
--------------------------------
If your taxes went up, you are in a less than one in ten unique tax situation.

All of this misses the point.  Your static scoreboard does not answer who benefits from a growing US economy?  (all of us, especially the disadvantaged)  Policies of Trump roughly doubled the growth rate.

https://tradingeconomics.com/united-states/gdp-growth-annual

ccp

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Re: Tax Policy
« Reply #876 on: April 16, 2019, 02:55:02 PM »
"If your taxes went up, you are in a less than one in ten unique tax situation."

Thank you very much.  :-(

G M

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Re: Tax Policy
« Reply #877 on: April 16, 2019, 03:08:47 PM »
GTFO Noo Joisey! ASAP!


"If your taxes went up, you are in a less than one in ten unique tax situation."

Thank you very much.  :-(

ccp

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Re: Tax Policy
« Reply #878 on: April 17, 2019, 09:20:11 AM »
"GTFO Noo Joisey! ASAP!"

planning on it.
not just staying because Florida has lousy bagels.

DougMacG

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Re: Tax Policy
« Reply #879 on: April 17, 2019, 09:46:54 AM »
"If your taxes went up, you are in a less than one in ten unique tax situation."

Thank you very much.  :-(

 :-(  I just meant that statistically, not personally.  Sorry about that.

The blue state penalty should not apply to people who voted against it.

While I defend the rich and capitalistic free enterprise on these pages I have been quite lucky to be of consistently low income.    :-(

Instead of a civil war we should just accept a two systems policy.  Red or blue until we come up with better names.  You opt in to one or the other no matter where you live and then be governed by those rules.  Seat belt laws, pot laws, healthcare laws, social security retirement age, tax rate, welfare rules?  It all depends on which system you chose.  How many of the elite liberal rich would opt into the penalize the rich system out of principle if given a Stephen Moore, Art Laffer designed alternative?

G M

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Re: Tax Policy
« Reply #880 on: April 17, 2019, 02:13:02 PM »
The left doesn't want there to be any place for their tax cattle to flee to.

"If your taxes went up, you are in a less than one in ten unique tax situation."

Thank you very much.  :-(

 :-(  I just meant that statistically, not personally.  Sorry about that.

The blue state penalty should not apply to people who voted against it.

While I defend the rich and capitalistic free enterprise on these pages I have been quite lucky to be of consistently low income.    :-(

Instead of a civil war we should just accept a two systems policy.  Red or blue until we come up with better names.  You opt in to one or the other no matter where you live and then be governed by those rules.  Seat belt laws, pot laws, healthcare laws, social security retirement age, tax rate, welfare rules?  It all depends on which system you chose.  How many of the elite liberal rich would opt into the penalize the rich system out of principle if given a Stephen Moore, Art Laffer designed alternative?

DougMacG

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Re: Tax Policy
« Reply #881 on: April 17, 2019, 03:29:05 PM »
"The left doesn't want there to be any place for their tax cattle to flee to."

That's what went wrong with California tax rates and with the former high federal corporate tax rates.  They couldn't lock the exits.  Capital is more mobile than people, but both move if given enough reason.
« Last Edit: April 17, 2019, 05:16:09 PM by DougMacG »

ccp

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Re: Tax Policy
« Reply #882 on: April 17, 2019, 03:57:34 PM »
" I just meant that statistically, not personally.  Sorry about that."

no offense taken
actually I thought it was an a separate author that you posted who wrote that.

everyone should pay less taxes
even a doctor like me .   :-D


G M

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Re: Tax Policy
« Reply #883 on: April 17, 2019, 04:21:21 PM »
" I just meant that statistically, not personally.  Sorry about that."

no offense taken
actually I thought it was an a separate author that you posted who wrote that.

everyone should pay less taxes
even a doctor like me .   :-D

Sorry, the power structure needs your money to buy votes.

Crafty_Dog

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WSJ: An inconvenient truth-- US tax revenues declined
« Reply #884 on: April 30, 2019, 07:39:49 AM »
I thought I was properly informed that US tax revenues had slightly increased.  Apparently, and politically quite inconveniently, such is not the case , , ,

https://www.wsj.com/articles/u-s-tax-revenue-declined-0-4-in-2018-11550084426

DougMacG

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Re: WSJ: An inconvenient truth-- US tax revenues declined
« Reply #885 on: April 30, 2019, 12:14:59 PM »
"I thought I was properly informed that US tax revenues had slightly increased."

   - Yes that was true.  The federal government operates on a fiscal year, Oct - Sept, and the revenue increase last year was small.  Note that the article says calendar year.  I've never seen revenue and deficit numbers reported on a calendar year.  Opponents were determined to find a measure where revenues didn't increase. 

4th Qtr 2018 economic optimism was hurt by what?  Democrat takeover of the House, I would argue..  Look what happened to the market when Dems took the House.  Add to that, what was the biggest news story facing the country and the economy in 2018 and Q4 2018?: The American President is a Russian spy facing impeachment.  To any observer we had the political stability of a third world banana republic.  Hard to stay on a message of optimism with all that going on.

"politically quite inconveniently, "

I agree, understatement!

Put this measure in perspective:

How much would revenues have increased without growth from tax reform?  Maybe we would be in recession by now with seriously shrinking revenues.  The trajectory before tax reform was roughly zero income growth and zero revenue growth.  Scott Grannis had the "GDP Gap" accumulating more lost economic activity than the national debt.  We were better off on that path??

What was the projected downfall in revenues by our opponents with their static analysis?  These numbers prove the gaping hole in the budget theory wrong.  Economic growth made up nearly all the revenue lost to rate cuts. 

To me it is amazing to take in roughly the same revenues at significantly lower rates.  It proves the growth argument; incomes increased significantly.  The "recapture" rate was nearly 100%.  You won't find admission of that in a Paul Krugman column.   The implication is that we were better off without these tax rate reductions and that is patently false. 

The calendar year stat started with a month where businesses had zero notice of a tax rate cut and ends with the weakest quarter brought down by fake news and a bad election.  By election time 2020 we will have more meaningful data.  I doubt revenues will be down for this fiscal year which is how these things are scored.

How long does it take for 4600 companies that left under punitive business tax rates to return?  Not instantly and some never return but there is a major inflow of new employment.

The 64k budget question is this:  Why isn't spending going down as employment and wages are going up?  The majority of the budget is transfer payments and fewer are needed.  Paraphrasing James Carville to explain our budget issues, It's the Spending Stupid. There isn't a tax code that balances infinite spending.
« Last Edit: April 30, 2019, 12:22:54 PM by DougMacG »

Crafty_Dog

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Re: Tax Policy
« Reply #886 on: April 30, 2019, 12:35:19 PM »
All well and good, but OTOH we predicted revenue increase, but even with the economy running full steam , , ,
 

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OTOH State Tax Revenues up
« Reply #887 on: April 30, 2019, 01:28:08 PM »
All well and good, but OTOH we predicted revenue increase, but even with the economy running full steam , , ,

Fair point. 

OTOH:

Look who did get the money with the income surge:
https://www.urban.org/sites/default/files/publication/99267/state_tax_revenues_soar_in_the_first_quarter_of_2018.pdf
State Tax Revenue Makes Biggest Gains in Seven Years
https://www.pewtrusts.org/en/research-and-analysis/articles/2019/01/22/state-tax-revenue-makes-biggest-gains-in-seven-years
Why did this happen?  Why don't these revenues count?  Total tax revenues did increase.    Build the infrastructure in the states.

Federal revenues increase only if you stay the course and complete the work.  I hope that is what we predicted.  It is not supply side economics to cut some tax rates and leave industries like healthcare and housing nationalized, spend like a drunken sailor and elect a House that wants full blown socialism instead of making the individual rates permanent - which was an essential part of the plan.  In that sense, the individual tax cuts ended Nov. 6. Two more trillion in spending today, code name infrastructure.  Said of George W Bush, he gave supply side economics a bad name - without ever trying it.  Here we go again.  OTOH, if the economy surges in Q2 and Q3 as it seems poised, this calendar year story is moot.  Was Tom Brady behind at halftime?  )


What we hoped for was enough good news from tax reform to win more elections and make more reforms.  We got the good economic news and everything else fell the other way.

Full steam economy?  105 million people work full time private sector in an economy of 255 million adults.  Of those who are employed full time private sector, a good portion of the best and the brightest aren't on the productive side as they still work to comply with red tape and taxation issues.

I hope we didn't post that one partial reform would solve everything instantly.  If so, that is of course wrong.  Major parts of the bill were anti-growth, anti-revenue, cf. child tax credit.  The individual rates that would spur the most growth were cut the least, and made temporary.  The capital gains indexing I called for never happened. 

The revenue projections were for ten years and neither side nor the electorate is staying the course so those are meaningless now on both sides.

The George Bush expansion ended the day that investors saw the rate reductions were temporary.  Live and [not] learn.

It's a choice not a promise as I see it.  Do we want try for growth including revenue growth by passing pro-growth policies or look for growth using anti-growth policies?  Better chance with the former.
« Last Edit: April 30, 2019, 03:45:15 PM by Crafty_Dog »

Crafty_Dog

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I asked Scott Grannis to comment
« Reply #888 on: April 30, 2019, 06:15:05 PM »
Actually, the weakness in revenues started in early 2016, a year before Trump took office. Since then, most of the weakness can be attributed to corporate revenues, which is not surprising considering the huge reduction in corporate tax rate. But total revenues on a rolling 12-month basis are higher now than they were at the end of 2016.

One mitigating factor, however: in exchange for a lower corporate income tax rate, companies are now forced to deem the repatriation of offshore cash. The deemed repatriation tax on corporations with significant offshore revenues will generate about $250 billion in accrued tax liabilities in Q4/17 which can be paid in installments over a period of 8 years.

DougMacG

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Re: Tax Policy
« Reply #889 on: May 01, 2019, 06:02:55 AM »
Thank you for getting Scott G in on this. 

As posted elsewhere, the long term difference in debt burden (using a constant spending assumption) between 1.9% growth and 3% growth is massive.

I noted the calendar year point already but add this:  The "first year" results of the tax reform reported that way miss the the April 15th for that year by 4 months.  Also, many taxpayers with more complex returns take the 6 month extension to October 15th.  So to me, it is a disappointing marker, especially for the 'political inconvenience', but not any kind of a complete data point.
-------------------------------
Copying this point over, as growth rate depends on the tax code:

Debt, CBO says, will be 150% of GDP in 30 years. 
https://www.cbo.gov/system/files/115th-congress-2017-2018/reports/52480-ltbo.pdf

Change the growth rate from  Obama levels, the CBO projection of 1.9% to 3% growth, the average over the 50 years before the latest collapse and malaise, and the deficit to GDP ratio in 30 years drops from 150% to 50%.
--------------------------------
And this comment of mine to tax thread:
On the tax question, I thought lowering corporate taxes to OECD average, 24-25%, was good enough but they lowered them to 20%, losing some revenue.  As mentioned, provisions like the child tax credit are spending programs in the tax code, costing revenue.  It wasn't all about growth and revenue.  Now people look to see if they are actually paying less and 80% are.  Then they are shocked to see we aren't collecting way more in aggregate.  Kind of an unfair expectation.  If people care truly about deficits, pay more or spend less.  But we tried taxing more under Obama and it didn't bring in more revenue.  That leaves spending and LONG TERM growth as the only deficit tools.


Crafty_Dog

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Re: Tax Policy
« Reply #890 on: May 01, 2019, 06:13:44 AM »
Email me at craftydog@dogbrothers.comn and I will forward the charts Scott sent me along with his comments.

DougMacG

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Tax revenues up 6% since tax rate cuts went into effect
« Reply #891 on: May 18, 2019, 06:27:44 AM »
https://issuesinsights.com/2019/05/16/revenues-are-up-6-after-trump-tax-cuts-so-why-is-the-deficit-surging/g



https://www.investors.com/politics/editorials/trump-tax-cuts-federal-revenues-deficits/

I don't think critics realize what big deal it is for revenues to even break even after tax rates are lowered.  It means incomes are surging and it means we are already at peak taxation, raising rates further would basically net us nothing.
« Last Edit: May 18, 2019, 08:43:34 AM by DougMacG »

ccp

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Re: Tax Policy
« Reply #892 on: May 18, 2019, 07:19:01 AM »
Now if only we had entitlement adjustments and see a bar graph of national debt boing in the opposite direction ............

dream on .......... not in my lifetime............ :-o

DougMacG

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Tax Policy, the employer employee tax wedge
« Reply #893 on: May 29, 2019, 07:46:44 AM »
Tax something and get less of it, like a sin tax only this one is for the sin of trying to contribute and pay your own way.

The Tax Wedge is the all important difference between what an employer pays and what an employee receives.







https://danieljmitchell.wordpress.com/2019/05/28/where-in-the-developed-world-are-average-workers-most-over-taxed/

DougMacG

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Spain proves taxpayers are very responsive to a change in tax rates
« Reply #894 on: August 09, 2019, 06:27:50 AM »
Spain proves "taxpayers are very responsive to a change in tax rates".

https://danieljmitchell.wordpress.com/2019/08/08/spain-and-lessons-on-supply-side-tax-policy/

[Who knew.]