FACT #1 - Lowering Taxes Provides INCREASED revenues, BUT

champion-these-facts

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Wed Mar-19-08 05:40 PM
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FACT #1 - Lowering Taxes Provides INCREASED revenues, BUT

Edited on Wed Mar-19-08 05:41 PM by champion-these-facts

I have been trying to search for one of the most profound facts that we as democrats can say separates us from core republican beliefs, and I think it could arguably be to attack, head on, the mantra chanted by Dittoheads and Reaganites alike....that being....lowering taxes provides increased revenues.

Ever heard this?
Has that fact bothered you?
Ever get into an argument with a Dittohead about something along this line?

Well rest assured fellow democrats this fact actually makes a strong case for core Democrat fiscal beliefs and core attitudes about a responsible government, one that does not irresponsibly cut taxes in time of war or while being obscenely in debt. We can take this issue head on and it is a crying shame that our democratic leaders don't do just that.

I say hit the Dittoheads and Reaganites right where it hurts the most.

"Lowering taxes increases revenues" - true - it CAN provided the economy grows along with it and the lowering of taxes can be loosely correlated to this economic growth. In this case, the growing economy can lead to prosperity and then the government taxes this increased prosperity, thus collecting more in revenues.

So far so good.

BUT.

Guess how much theoretically one might expect to get back on every dollar that is cut?

Now stop to think.
You cut taxes 1 dollar. You got "increased revenues". Do you get the 1 dollar back plus more?

NO.

Theoretically (no need to complicate this right now with source material which can be provided) many economists belief the THEORETIC LIMIT OF WHAT CAN BE GAINED THROUGH LOWERING TAXES, AND ECONOMIC GROWTH IS 20 CENTS BACK ON THE DOLLAR. That is actually quite high and a figure that no ditto head could possibly argue with, in fact they might champion such a return.

But
IT is NOT $1.20 MIND YOU....WE'RE NOT MAKING ANY MONEY HERE. EVEN IN THE BEST CASE SCENARIO THE GOVERNMENT HAS LOST 80 CENTS ON EVERY 1 DOLLAR TAX CUT.

WORKS GREAT IF YOU HAD THE MONEY TO BEGIN WITH, BUT NOT IF YOU'RE CONSTANTLY ADDING TO THE DEBT.

I have tried to search for data on IRS revenues and those quarters that show increased revenues because historically the government never gets close on average to that 20% theoretical upper limit. I wouldn't be surprised if the average is 5% or less.

But the point of this is to first establish a simple fact, the government incurs a NET LOSS.
REVENUES ARE INCREASED, BUT UNLESS THAT MONEY IS ALREADY "IN THE BANK" AND WE ARE NOT IN DEBT, OR IF WE ARE RUNNING A SURPLUS, WE CAN ONLY ASSUME THAT THE MONEY WE CUT IS CONTRIBUTING AT 80 CENTS OR GREATER FOR EVERY TAX DOLLAR CUT TO THE DEBT THAT ALREADY EXISTS.

So the point here is to separate democrats from republicans in terms of a keen sense of fiscal responsibility. It wasn't until the dawn of Reaganomics, unusual tax cuts to the rich, in tune with ever relentless defense spending, that we got endowed with a near permanent debt situation.

THE SOLUTION IS SIMPLY TO REVERSE THAT THEORY, AS CLINTON/GORE DID IN THE 90S...NAMELY...INCREASE THE UPPER RATE TO APPROXIMATELY 40 TO 50%.

Had Reaganomics NOT taken hold, one could imagine a scenario where the government had some reasonable choices to make. Should we have this service vs. that, vs. returning some money to the people, to stimulate the economy, to hopefully provide an overall positive thrust for America.

Those rationale decisions on tax cuts are no longer available because extreme Reaganomics has thrust us into a no-win situation.

WE HAVE NO CHOICE NOW BUT TO RAISE TAXES, ESPECIALLY TO THOSE THAT HAVE PROSPERED TO THE TUNE OF AN AVERAGE OF 15% ON THEIR MONEY FOR THE PAST 20 YEARS.

These are the people that actually benefit, personally (and temporarily by the way) by the cutting of taxes and running up of the national debt.....AND WHICH WILL LET GO OF THIS DREAM SCENARIO WITH SOME FIGHTING TO THE BITTER END. Why end this joy ride for them....it is of no real personal consequence to their thinking or pocket books because they continue to make 15% on their money.

Why would they care if there is a national debt?
The consequences are small....with the total interest on the debt each year funded by ALL Americans.

While they do nothing but prosper at an average rate which compounds and compounds their individual assets to every increasingly obscene levels.....you and I fund payments on the national debt each year by the tune of about 8 cents on every tax dollar we pay. (It was as high as 15 cents on the dollar during the Clinton/Gore years before this was turned around somewhat).

Does someone in the upper 1/10th of one percent worry about this "tax burden" to pay interest on the national debt?
Proportionately they pay way less than you and I in terms of assets they have gained vs. reported income.

Class warfare?
Personally, I'm sick and tired of paying a "rich tax" of 8 cents on my tax dollar to pay down interest on the debt. I don't want that "rich tax" anymore.
I don't want to have to pay interest on the debt which was originally fueled and what continues to be fueled primarily by having too low an upper rate and too much military spending.

Trimming each to reasonable levels (holding military spending constant to inflation and raising the upper rate to 40%) will give back 300B per year or more that Clinton/Gore realized and applied to balancing the budget and paying down the debt.