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Politics : A US National Health Care System?
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To: John Koligman who wrote (7193)6/24/2009 1:37:37 PM
From: TimF   of 42652
 
Now you are at least dealing with something where there is a real connection. Reduce tax rates and you can reasonable expect less revenue than you otherwise would have had. If you have less revenue than you otherwise would have had the deficit is likely to be larger.

Of course you ignore the larger role of spending increases, but still you are at least dealing with an issue where there is a real connection rather than projecting a scenario that if some guy won a lottery after having a heart attack, that heart attacks cause you to get rich.

But even here the connection is a lot more complex than you suppose. In extreme cases cutting ordinary income taxes can increase revenue in the short to middle run (and in less extreme cases at least in the very long run), through its positive effect on economic growth and its negative effect (reduction of) tax avoidance and evasion. Even in non extreme cases capital gains cuts can increase government revenue in the short run (as investments get cashed in that where otherwise held on to, to avoid paying the higher rate), and in the long run (extra economic growth), while perhaps causing less revenue in between (the big cash in already occurred, and not enough time has passed for additional economic growth to be significant).

If I was following the same pattern of argument that you've been following I'd have "proof" that cutting taxes increases revenue. After all revenue greatly increased after Regan's tax cuts. Of course those tax cuts where from 70% marginal rates on ordinary income, not cuts from today's rates. And there where many other factors (such as deregulation, the crushing of inflationary expectations, and an expansion of world trade), and revenue would tend to go up anyway even with no changes. And this is one example. So to argue that this means that "tax cuts increase revenue" is to make an insufficiently supported argument, just as your statements and implied arguments lack support.
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