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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Scumbria who wrote (140204)	4/23/2001 2:28:08 PM
From: greenspirit	Read Replies (3) \| Respond to of 769667

Ok Scumbria, let's stick to the facts, and define the question very clearly so we can ensure we're both on the same page. Question: Did revenue increase or decrease as a result of Reagan's tax cut? In order to answer the question precisely, we first need to define the time frame in question. One way is to examine the record from the month Reagan formally took office, January 1981, through the month he left the White House, January 1989. An alternative approach is to allow a one-year lag for the policy changes to be enacted and take effect on the economy. After all, Reagan's tax cuts were not even passed by Congress until mid-year 1981, and did not begin to take effect until October 1, 1981. His first budget proposal was for fiscal year 1982. If we define the beginning of the Reagan years as the first full year when the policies were in effect, we're talking about 1982-1989. If we can agree on this time frame, real federal revenues grew at a faster pace after the Reagan tax cuts than before. From 1982 to 1989, they expanded by 24.1 percent. The lesson of the 1980s is consistent with the supply-side theory that there are behavioral and investment responses to changes in tax rates. As to tax policies... 1981 - The Economic Recovery Tax Act of 1981. Otherwise known as Reagan's supply-side tax cut included: An across-the-board reduction in individual income tax rates of approximately 23 percent, phased in over 33 months. A reduction in the maximum top rate from 70 percent to 50 percent, beginning in 1982. 1982 - Tax Equity and Fiscal Responsibility Act of 1982 instituted a half-basis adjustment for investment tax credits in calculating depreciation. Further, it repealed the acceleration of depreciation scheduled in 1985 and 1986 by ERTA. Raised the federal unemployment tax wage from $6,000 to $7,000. Increased airport, airway, cigarette and telephone excise taxes. Along with reducing some tax cuts related to charitable giving. Even if we used a static linear model of the Keynesian economist variety, this second act wouldn't account for a quarter of Reagan's tax cut. In the most optimistic forcast, it would only account for 200 billion dollars over several years, while a linear look at Reagan's tax cut would amount to over 900 billion dollars in lost revenue. Therefore, supply siders were correct in predicting that behavior effects revenue generation during reductions in marginal tax rates. A systems view is required to understand tax revenue generation, linear static modeling doesn't work. Now, let's take a look at the graph I've linked to you several times. And examine where the revenue's increased during Reagans term? heritage.org Clearly, no matter how you slice it, revenue increased during the Reagan years (after cutting marginal tax rates). As a matter of fact, revenue increased faster than any other period except during the Kennedy administration. heritage.org Therefore, the problem was as I've described it repeatedly, namely, too much spending not lack of revenue. Chart: Higher tax rates, lower revenue. heritage.org Now, let's change the subject a bit and see if we can discuss philosophy for a minute. You've repeatedly stated that Reagan's tax cut was a disaster for our country. Since the focus of his tax cut was a reduction of tax rates from 72% to 50% then to 28% in 1986. Given this, where would you prefer the rate to be today? Should we go back to a 72% marginal tax rate for the betterment of our nation? Is that what Clintonista's really want. To increase our marginal tax rate back to where it was before Reagan reduced it, to 72% or higher? Will you answer this one question I pose? I doubt it... Michael