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

To: Steve Dietrich who wrote (347837)	1/25/2003 4:50:29 PM
From: d.taggart	Respond to of 769670

guess one should factor in huge tax increases under certain presidents,look it up,then apologize

To: Steve Dietrich who wrote (347837)	1/25/2003 4:56:48 PM
From: Peter O'Brien	Read Replies (2) \| Respond to of 769670

The source you cite (cbo.gov) shows the revenue in nominal dollars each year. Yes, the nominal annual revenue growth under Carter was higher. But, in case you had forgotten, we were also experiencing double-digit inflation during Carter's term. The inflation rate under Reagan was much lower (typically in the 3-4% range). In the year 1980, the inflation rate was 13.5%. According to your source (cbo.gov), federal revenue increased from $463B in 1979 to $517B in 1980, which is only an 11.7% increase. Thus, real revenue fell during 1980. Also, remember that "bracket creep" due to inflation was not eliminated until Reagan's term. So, effectively, the high inflation rates under Carter were raising everyone's tax rate each year. Despite these phantom tax increases, real revenue still fell during the year 1980.

To: Steve Dietrich who wrote (347837)	1/26/2003 2:11:04 AM
From: JEB	Read Replies (1) \| Respond to of 769670

All I hear from you is opinion. I see no evidence of independent data to support your claim and I certainly am not going to jump through anyones hoops. Present your case or label your post as IMO.

To: Steve Dietrich who wrote (347837)	1/31/2003 12:10:05 AM
From: JEB	Read Replies (1) \| Respond to of 769670

The Reagan Tax Cuts: Lessons for Tax Reform April 1996 During the summer of 1981 the central focus of policy debate was on the Economic Recovery Tax Act (ERTA) of 1981, the Reagan tax cuts. The core of this proposal was a version of the Kemp-Roth bill providing a 25 percent across-the-board cut in personal marginal tax rates. By reducing marginal tax rates and improving economic incentives, ERTA would increase the flow of resources into production, boosting economic growth. Opponents used static revenue projections to argue that ERTA would be a giveaway to the rich because their tax payments would fall. The criticism that the tax payments of the rich would fall under ERTA was based on a static conception of human behavior. As a 1982 JEC study pointed out,[1] similar across-the-board tax cuts had been implemented in the 1920s as the Mellon tax cuts, and in the 1960s as the Kennedy tax cuts. In both cases the reduction of high marginal tax rates actually increased tax payments by "the rich," also increasing their share of total individual income taxes paid. Unfortunately, estimates of ERTA by the Democrat-controlled CBO continued to show falling tax payment by upper income taxpayers, even after actual IRS data had become available showing a surge of income tax payments by affluent taxpayers. Given the current interest in tax reform and tax relief, a review of the effects of the Reagan tax cuts on taxpayer behavior and tax burden provides useful information. During the 1980s ERTA had reduced personal tax rates by about 25 percent, while the Tax Reform Act of 1986 chopped them yet again. Tax Rates and Tax Revenues High marginal tax rates discourage work effort, saving, and investment, and promote tax avoidance and tax evasion. A reduction in high marginal tax rates would boost long term economic growth, and reduce the attractiveness of tax shelters and other forms of tax avoidance. The economic benefits of ERTA were summarized by President Clinton's Council of Economic Advisers in 1994: "It is undeniable that the sharp reduction in taxes in the early 1980s was a strong impetus to economic growth." Unfortunately, the Council could not bring itself to acknowledge the counterproductive effects high marginal tax rates can have upon taxpayer behavior and tax avoidance activities. Since 1984 the JEC has provided factual information about the impact of the tax cuts of the 1980s. For example, for many years the JEC has published IRS data on federal tax payments of the top 1 percent, top 5 percent, top 10 percent, and other taxpayers. These data show that after the high marginal tax rates of 1981 were cut, tax payments and the share of the tax burden borne by the top 1 percent climbed sharply. For example, in 1981 the top 1 percent paid 17.6 percent of all personal income taxes, but by 1988 their share had jumped to 27.5 percent, a 10 percentage point increase. The graph below illustrates changes in the tax burden during this period. Click here to see Figure 1. house.gov The share of the income tax burden borne by the top 10 percent of taxpayers increased from 48.0 percent in 1981 to 57.2 percent in 1988. Meanwhile, the share of income taxes paid by the bottom 50 percent of taxpayers dropped from 7.5 percent in 1981 to 5.7 percent in 1988. A middle class of taxpayers can be defined as those between the 50th percentile and the 95th percentile (those earning between $18,367 and $72,735 in 1988). Between 1981 and 1988, the income tax burden of the middle class declined from 57.5 percent in 1981 to 48.7 percent in 1988. This 8.8 percentage point decline in middle class tax burden is entirely accounted for by the increase borne by the top one percent. Several conclusions follow from these data. First of all, reduction in high marginal tax rates can induce taxpayers to lessen their reliance on tax shelters and tax avoidance, and expose more of their income to taxation. The result in this case was a 51 percent increase in real tax payments by the top one percent. Meanwhile, the tax rate reduction reduced the tax payments of middle class and poor taxpayers. The net effect was a marked shift in the tax burden toward the top 1 percent amounting to about 10 percentage points. Lower top marginal tax rates had encouraged these taxpayers to generate more taxable income. The 1993 Clinton tax increase appears to having the opposite effect on the willingness of wealthy taxpayers to expose income to taxation. According to IRS data, the income generated by the top one percent of income earners actually declined in 1993. This decline is especially significant since the retroactivity of the Clinton tax increase in that year limited the ability of taxpayers to deploy tax avoidance strategies, temporarily resulting in an increase in their tax burden. Moreover, according to the FY 1997 Clinton budget submission, individual income tax revenues as a share of GDP will be lower during the first four years of the Clinton tax increase, which include the effects of the 1990 tax increase, than under the last four years of the Reagan tax changes (FY 1986-89). Furthermore, according to a study published by the National Bureau for Economic Research,[2] the Clinton tax hike is failing to collect over 40 percent of the projected revenue increases. Incidentally, the claim that unrealistic supply side Reagan Administration revenue projections caused large budget deficits during the 1980s is false. Nonetheless, this false allegation is often used against current tax reform proposals. The official Reagan revenue projections immediately following enactment of ERTA did not assume huge revenue increases, and were actually quite close to the CBO revenue projections. Even the Democrat-controlled CBO projected that deficits would fall after the enactment of the Reagan tax cuts. The real problem was a recession that neither CBO nor OMB could foresee. Even so, individual income tax revenues rose from $244 billion in 1980 to $446 billion in 1989. Conclusion The Reagan tax cuts, like similar measures enacted in the 1920s and 1960s, showed that reducing excessive tax rates stimulates growth, reduces tax avoidance, and can increase the amount and share of tax payments generated by the rich. High top tax rates can induce counterproductive behavior and suppress revenues, factors that are usually missed or understated in government static revenue analysis. Furthermore, the key assumption of static revenue analysis that economic growth is not affected by tax changes is di sproved by the experience of previous tax reduction programs. There is little reason to expect static revenue analysis to evaluate the economic or distributional effects of current tax reform proposals much better than it evaluated the Reagan tax program 15 years ago. Christopher Frenze Chief Economist to the Vice-Chairman house.gov

To: Steve Dietrich who wrote (347837)	1/31/2003 1:48:42 AM
From: JEB	Respond to of 769670

Reagan Changed the World A twentieth anniversary. Mr. Moore is president of the Club for Growth August 17, 2001 8:40 a.m. No event over the past quarter century has had a more profound impact on the U.S. economy and the prosperity of the 1980s and '90s than the Reagan tax cut of 1981. It was signed into law on August 15, 1981 — a day that will live in history as a great American turning point. Liberals to this day continue to fanatically denounce the Reagan economic plan — known as supply-side economics — as an economic catastrophe. Dick Gephardt routinely warns against "repeating the mistakes of the 1980s." In a recent TV interview he proclaimed that it took the nation "15 years to dig out of the hole that Reagan put us in." The truth is that the nation was in quite a deep hole of economic collapse when Reagan was elected. We were in the midst of the worst economic depression in 1980-81 than at anytime since the Great Depression of the 1930s. Here is how Newsweek described the economy that Reagan inherited from Jimmy "malaise" Carter: "When Ronald Reagan steps into the White House next week, he will inherit the most dangerous economic crisis since Franklin Roosevelt took office 48 years ago." That was no exaggeration. There is a sharp contrast between the performance of the U.S. economy before, and then after the Reagan tax cuts. In 1980 the U. S. inflation rate hit a record high of 13.5%. Mortgage interest rates soared to 20 percent creating a moribund housing industry. America was rapidly deindustrializing. Unemployment had reached its highest level in 40 years. We were literally teetering on the brink of a 1930s style depression. Economist Henry Kaufman of Salomon Brothers reflected the gloomy mood of most Americans at that time when he remarked, "I am aghast at how much our country has faltered." In the early 1980s when I graduated from college, the economy was so bad and jobs were so scarce, it was hard to get hired as a burger flipper at the minimum wage. Reagan's tax-rate cuts — combined with his emphasis on sound money, deregulation, and free trade — created a mighty economic expansion in the 1980s. Bob Bartley of the Wall Street Journal described this period as "the seven fat years." Any student of the 1980s, who wishes to know what really happened to the economy in the Reagan years must read Bartley's invaluable book by that title. This expansion carried through the 1990s as well — creating America's greatest sustained wave of prosperity ever. " The economy grew by more than one-third in size. Growth was so high in the 1980s that grouchy leftists were forced to resort to ridiculing the Reagan years as the "decade of greed." Consider what happened to the net wealth of the nation over this lengthy period of peace and prosperity. In 1982 the Dow Jones hit a low point of 792. When Reagan left office, the market had more than tripled in value. Then in tripled again over the next 10 years. In other words, after the Reagan tax cuts, the stock market soared from a low of 800 to well over 10,000 today. Miraculous is the only word to describe this $15 trillion increase in Americans' wealth. It wasn't just the affluent who benefited from the 1980s expansion. After Reagan's tax-rate cuts, real median family incomes, which had fallen sharply during the stagflationary period 1977-82, rose by nearly 10 percent. From 1981 to 1989, every income quintile — from the richest to the poorest — gained income according to the Census Bureau economic data. The table below shows that by 1989 there were 5.9 million more Americans whose salaries exceeded $50,000 a year than there were in 1981 (adjusting for inflation). Similarly, there were 2.5 million more Americans earning more than $75,000 a year, an 83 percent increase. And the number of Americans earning less than $10,000 a year fell by 3.4 million workers. Incomes Moved Up in the 1980s (billions 1981 dollars) Workers Earning < $10,000 > $50,000 > $75,000 1981 66.0 9.9 3.0 1989 62.6 15.8 5.5 Difference -3.4 5.9 2.5 % Change -5% 60% 83% Source: Cato Institute calculations based on Bureau of the Census; U.S. Statistical Abstract, 1996, p. 478, Table 740. *Earning levels are adjusted for inflation between 1981 and 1989. But what about the rise of the national debt that so many of Reagan's critics are so hyper-obsessed over? Tax cuts didn't cause the surge in debt. Spending did. Between 1980 and 1990 the federal tax collections doubled from $500 billion to $1 trillion. Tax rates went down, but tax payments went up, because a prosperous economy always produces an overflow of tax payments, just as a stagnant economy never generates sufficient tax revenues to pay the bills. This is just as Reagan had predicted. I have always believed that so many in the media and in academia have such a visceral hatred of the Gipper is that he had this wonderful talent of proving them wrong. Reagan used to take great joy in noting that when the economy roared back to life in 1983 and 1984, "no one calls it Reaganomics anymore." That's because Reaganomics was supposed to be a failure according to the models of Harvard and other Ivy League Keynesian economists. How frustrating it must have been for someone trained in economics at tiny Eureka College to blow their decrepit theories away. In the 1980s incomes, employment, investment, wealth, consumer confidence, the stock market, and tax-payments rose. Interest rates, inflation, and bankruptcies plummeted. If the tax cuts of the 1980s were a mistake, there are millions of Americans who believe we could use mistaken policies like that again right about now. nationalreview.com

To: Steve Dietrich who wrote (347837)	1/31/2003 1:55:19 AM
From: JEB	Respond to of 769670

20th anniversary of Reagan tax cut 08/13/2001 Press Release FOR IMMEDIATE RELEASE: CONTACT: Jeff Kwitowski (202)452-8200 or jeffk@empower.org Washington, DC – Today marks the 20th anniversary of the Ronald Reagan tax cut. The bill Reagan signed into law that day was entitled the Economic Recovery Tax Act, also known as the Kemp-Roth bill after its two principal sponsors, U.S. Representative Jack Kemp and Senator Bill Roth. Jack Kemp, now co-director of Empower America, released the following statement today commemorating this historic day: "Twenty-years ago today, Ronald Reagan signed into law the Economic Recovery Tax Act (ERTA) slashing marginal income tax rates by 25% over three years and indexing them for inflation to make the lower rates permanent. It may be hard for some people to remember, but in 1980 when Bill Roth and I embarked on the drive to lower tax rates the top marginal income tax rate was 70% and the lowest was 20%. Following the experience of the Kennedy tax rate cuts of 1962 and 1963, the Kemp-Roth bill was designed to reduce tax rates by 30% across-the-board. At the punishing level of taxation America faced prior to the Reagan tax cut, people had little incentive to work, save and invest. The economy was being asphyxiated for a lack of oxygen—capital and labor—that it needs to flourish. As a consequence, the country was mired in stagflation with simultaneously high unemployment and rising inflation. Consumer price inflation hit 13.5 percent, unemployment rose to 13.5 percent and the prime rate peaked at 21.5 percent. Most economists didn’t have a clue what to do. Ronald Reagan did, and implementation of his economic recovery plan began with enactment of his tax rate reductions on this date in 1981. After the Reagan tax rate reductions unleashed the entrepreneurial spirits of the marketplace, the economy revived and grew at an average annual rate of 3.2 percent throughout the remainder of President Reagan’s term. Interest rates, inflation, and unemployment plummeted, and when all was said and done, we ended stagflation, started an eighteen-year expansion and rebuilt our national defense, not a bad return on investment. Today, we again face economic problems caused by deflationary monetary policy and excessive tax rates and regulations. Although Congress just enacted President Bush’s tax rate reduction package, the largest tax cut since ERTA, the reductions are phased in over 10 years and tax rates, especially tax rates on capital investment, remain too high. So it is fitting that while we celebrate the successes of the past, we learn from them with an eye toward the future. Therefore, I urge Congress before the end of this legislative session to reduce the capital gains tax rate, improve the depreciation treatment of plant and equipment investment, especially investments in technology, and eliminate the death tax immediately. Furthermore, I urge the Fed to recognize that deflation rather than inflation is the primary monetary impediment to renewed growth at this time and to give assurances that it would inject sufficient new liquidity into the economy to meet the rising demand for money that such tax changes would occasion." empoweramerica.org

To: Steve Dietrich who wrote (347837)	1/31/2003 2:08:56 AM
From: JEB	Read Replies (1) \| Respond to of 769670

A Supply-Side Tax Cut Myth Daily Policy Digest Tax Issues / Effects Of Tax Thursday, January 02, 2003 There is a lot of economic misinformation in the news pages of major newspapers. Some of the worst is considered conventional wisdom, assumed to be true by reporters, editors and readers alike. A good example is the myth that Ronald Reagan and supply-side economists claimed the 1981 tax cut would lose no revenue. Based on the "Laffer Curve," they are said to have asserted higher economic growth would raise more revenue at lower tax rates. In fact, every official estimate made by the Reagan Administration, in the budget and elsewhere, showed large revenue losses associated with the 1981 tax cut. Furthermore, these estimates were comparable to those made by independent agencies such as the Congressional Budget Office (CBO), which predicted federal revenues of $769 billion in 1984, after the tax cut, whereas the Reagan Administration predicted $771 billion. Both estimates were wrong, but show that the Reagan Administration used standard revenue estimating methods in making its estimates. Ironically, it was liberal economists who actually said that the tax cut might raise revenue. For example, Richard Musgrave of Harvard University told Congress's Joint Economic Committee in February 1981 that the supply-side effects of the Reagan tax cut might recoup 30 percent to 35 percent of the lost revenue, with demand-side effects bringing in another 18 percent. In a 1987 study, the CBO concluded that economic effects had reduced the net revenue loss of the 1981 tax cut by about 25 percent. The main reason for the 1980s budget deficits was that inflation fell much more quickly than economists in 1981 thought possible -- falling from 12.5 percent in 1980 to just 1.1 percent by 1986. This lowered expected revenues by reducing bracket-creep, where taxpayers are pushed into higher tax brackets by inflation. Also, spending was much higher than expected. Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, January 1, 2003. ncpa.org